Monday, October 22, 2007

Business Screws Up; Choose Markets

A biz I love (Amazon) and one of which I’m not too fond (Target) make bad mistakes as set forth in this TCS article:

Consider business practices that alienate customers and clients. Surely no business with a general clientèle, such as Amazon, Home Depot, or Kmart, has this as a goal. Yet it occurs. Why?

The offending employee may be evil, bitter, or malicious, but economists have little to say about individual characteristics. Rather, economists examine the incentives and information facing the person who annoyed or harmed the customer. Here are two examples.

You’ll have to read them but both are egregiously bad errors. The good news? Go to Overstock.com or Wal-Mart and exercise your freedom to choose. Amazon and Target will make corrections out of nothing but self-interest. The Market will take care of errors made by businesses.

But what about when markets fail?

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