00:00:00
Yeah. So when I talk about, you know,
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why do firms choose not to raise the
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price just to to clear the market, what
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the economists say is the kind of the
00:00:09
the optimal thing to do. I mean,
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sometimes it doesn't make sense to do it
00:00:13
because of what you're selling. So, uh,
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you know, if it's admission to an elite
00:00:19
college or university like, uh, you
00:00:21
know, Wharton or University of
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Pennsylvania, we don't just raise
00:00:24
tuition until we fill a class with the
00:00:26
people willing to pay the most because
00:00:28
that's not the point of the institution.
00:00:30
The the experience of being here is, you
00:00:32
know, we want to admit only the best and
00:00:34
brightest and have them get to interact
00:00:35
with each other and and kind of we think
00:00:37
our teaching will be most effective for
00:00:39
that group. But we are very selective in
00:00:41
that market for kind of picking the the
00:00:43
group that is right for us. And that
00:00:46
same thing is true on the labor market
00:00:48
which is another of these hidden markets
00:00:49
where you don't just lower your offered
00:00:51
salary until you get one person apply.
00:00:53
You you uh have to kind of work through
00:00:56
the applicants that you get and kind of
00:00:57
pick the right one. But some of the
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firms when they do this strategy, it's
00:01:01
not just about kind of finding the right
00:01:03
people. It it might be about bolstering
00:01:05
future demand, right? Maybe the
00:01:07
restaurant likes the line around the
00:01:08
block because then it builds demand for
00:01:12
the next night when people walk by and
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like, "Oh my god, how do I get into that
00:01:15
restaurant? It looks so good."
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>> Right. And so I think this is true of a
00:01:19
lot of like uh fad crazes. So this
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summer it was Laboos. I don't know if
00:01:23
you came across this, but
00:01:24
>> I heard.
00:01:25
>> Yeah. So, you know, they're they're
00:01:27
these like little stuffed animals and
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they remind me of Beanie Babies or when
00:01:30
I was a kid, Cabbage Patch dolls where
00:01:32
like everybody wants one this summer and
00:01:34
they're impossible to get. And that's,
00:01:36
you know, it's not I don't think it's
00:01:38
just that they have trouble producing
00:01:39
them. I think they want there to be a
00:01:42
mania around them so that people will
00:01:44
get excited by uh by buying it and and
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that, you know, creates these hidden
00:01:49
markets that might not otherwise exist.
00:01:51
So, how common then are hidden markets?
00:01:53
And are they more common than maybe we
00:01:55
think that that they're out there?
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>> They're definitely more common than than
00:01:59
we think. So, when I started kind of
00:02:01
talking about hidden markets and and
00:02:03
thinking about all the ways that they
00:02:04
crop up. I mean, I I was writing a book
00:02:06
on it and I was also surprised how often
00:02:08
that they they pop up and they pop up in
00:02:10
these uh environments that are
00:02:12
particularly important. Thank you for
00:02:14
listening to The Ripple Effect. We hope
00:02:15
you found this episode informative and
00:02:17
engaging. Don't forget to subscribe and
00:02:20
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00:02:21
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00:02:23
from the Wharton School.
