On Wed, 8 Mar 2000, Enrique Diaz-Alvarez wrote:
> I really don't know that much about the textile industry. I was just
> bringing up that prices of clothes appear to bear fairly little
> relationship to the labor costs of the country they were made in.
> Marketing and product placement seem to be far more important
> determinants.
On that we are completely agreed. The only difference (if indeed there is any difference between is us) is that I think that marketing costs may be part of what drive the search for lower labor costs. Doug had an interesting interview on his radio show last week with Naomi Klein, author of _No Logo_, who said that such high profile companies as the Gap or Benetton spent so much money "making a brand" that they really say with with a straight face that they need a mark-up of 400% to make it worth the candle -- that a 100% doesn't make it anymore. Which completely confirms your main point, that when there's a brand involved, we're mainly paying for the brand.
BTW, when mainstream economic textbooks make their passing comments on monopoly and oligopoly they always mention that "having a special brand that consumers prefer even at higher prices" is a kind of monopoly. And this sort of thing seems to be the rule among the largest and most successful firms in retailing -- that they spend enormous amounts of money to "make a brand" and reap something analogous to monopoly profits. Do mainstream economists generally consider that for all the dazzle and huge sums involved that this kind of situation is still covered by a simple model of "monopoly competition?" Has anyone ever examined it in terms of monopoly costs vs. monopoly profits -- i.e., the cost of maintaining such pseudo-monopolies vs. the higher return?
> BTW, I like nice stuff; I just don't like to pay for TV ads.
I always suspected you were stylish :o)
Michael
__________________________________________________________________________ Michael Pollak................New York City..............mpollak at panix.com