After having written our papers on racism in contemporary media, I thought this news article would be of interest. Is Walmart being racist or rational?
President Obama walks fine line on race, justice
11 years ago
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ReplyDeleteI'll admit right off the bat- I'm biased. I'm an economics major, and the central goal of all of the economics classes I've taken so far has been to maximize profit/reach an efficient point through maximization of "total surplus."
ReplyDeleteHowever, I very seriously doubt that an enormous retailer such as Walmart, which clearly understands profit maximizing, is changing its prices in an effort to subvert racial equality in America/ foster skewed perceptions of racial worth in young children. I think that whoever made that pricing decision charged less for Black dolls than for white dolls because efficiency requires one to prices where supply=demand. If supply for Black dolls is the same as supply for white dolls but the demand for Black dolls is lower, price of Black dolls will also be lower. Thus, if demand for white dolls is higher than that for Black dolls, either walmart has to produce fewer Black dolls or price them lower.
The questions that linger in my mind after reading the article are as follows:
1) Should Walmart, and other retailers, be responsible for the maintinence of the national psyche? Or should they merely serve the purpose for which they were founded: PROFITS.
2) If a simple economic analysis tells us that Walmart is probable only reacting to market demand in their pricing, shouldn't we be asking fewer questions about Walmart and more questions about WHY the market demand is the way it is?
To your point Clare, I think that you are spot on in that the pricing, like any other product, is developed based on the estimated equilibrium in the demand curve (developed in order to maximize profit). In this way, There is (assuming that the supply curve is constant between the white and black barbie dolls) either greater elasticity or less demand for the black barbie.
ReplyDeleteThis fact doesn't necessarily reflect badly, however. On the surface, it appears as if Black Barbie (capitalized?) is less desirable and therefor fewer sell, but the discrepancy in demand could simply be a reflection of the consumer base for Barbies. Is it wrong for a white girl to prefer the white barbie over the black one? Probably not and there is a larger Caucasian consumer base for barbies as a reflection of population. In this light, it may simply be that girls of different ethnic/cultural decent prefer a barbie that reflects their culture and heritage, and the price discrepancies between the barbies simply are the result of discrepancies in population.
This fact, however, is difficult to prove without knowing exactly how Walmart manages inventory. Assuming that each store manages its own inventory independently (it probably doesn't) the Black Barbie would have a greater price in stores within African American communities than the White Barbie.
What is very interesting about this entire scenario is the simple fact that for the most part Barbie dolls are prices equally. According to simple economics discussed above this shouldn't be the case. My best guess as to why is that Mattel inc. is artificially manipulating prices in order to avoid bad press. After all, Barbie has a long combative history with accusations of racism. Any bad press which suggests that Barbie is instilling an unrealizable identity for women probably has a large impact on concerned parents who ultimately buy the Barbies.