This podcast illustrates a couple of managerial economic concepts (min 10 to 12):
- The street food vendors market in NYC used to be composed mainly by hot-dog carts. That's the simplest and natural product choice for early entrants to the market. The sellers all look alike hence, to soften price competition, choose to locate their carts in spread out locations [classical Hotelling model].
- As the market develops new entrants choose different production technologies (food trucks) and varieties (korean bbq, cupcakes, dumplings). This can be the consequence of a change in consumers tastes [greater taste for variety], an outward shift in the demand, or both. A demand shift means that there's room for more sellers, but since most locations are taken by hot-dog carts, the only way to differentiate (again, to avoid price competition) is through food variety.
- Last, the emergence of peace and the informal code of conduct is a clear example of how cooperative behavior arises from repeated interaction where the "static game" resembles the prisoner's dilemma.
- The street food vendors market in NYC used to be composed mainly by hot-dog carts. That's the simplest and natural product choice for early entrants to the market. The sellers all look alike hence, to soften price competition, choose to locate their carts in spread out locations [classical Hotelling model].
- As the market develops new entrants choose different production technologies (food trucks) and varieties (korean bbq, cupcakes, dumplings). This can be the consequence of a change in consumers tastes [greater taste for variety], an outward shift in the demand, or both. A demand shift means that there's room for more sellers, but since most locations are taken by hot-dog carts, the only way to differentiate (again, to avoid price competition) is through food variety.
- Last, the emergence of peace and the informal code of conduct is a clear example of how cooperative behavior arises from repeated interaction where the "static game" resembles the prisoner's dilemma.
