Brand names are another way of economizing on scarce knowledge.
Brand names are not guarantees. But they do reduce the range of uncertainty. If a hotel
sign says Hyatt Regency, chances are you will not have to worry about whether the bed
sheets in your room were changed since the last person slept there.
Like everything else in the economy, brand names have both benefits and costs. A hotel
with a Hyatt Regency sign out front is likely to charge you more for the same size and
quality of room, and accompanying service, than you would pay for the same things in
some locally—run independent hotel if you knew where to look.
Both Kodak and Fuji film have to be better than they would have to be if boxes simply
said “film,” without any reference to the manufacturer.
McDonald’s not only has to meet the standards set by the government, it has to meet the
standards set by the competition of Wendy’s and Burger King. If Campbell’s soup were
identified on the label only as “soup” (or “Tomato Soup,” “clam chowder,” etc), the
pressures on all canned soup producers to maintain both safety and quality would be less.
One of the reasons for the great success of McDonald’s in Moscow—the largest in the
world, with lines of people waiting to get into it—is that it was being compared to the
previous band quality of service in Soviet restaurants, not to Wendy’s or burger King.
Genuine plunder of one nation or people by another has been all too common throughout human history. During the era before the First World War, when Germany had colonies in Africa, only 4 of its 22 enterprises with cocoa plantations there paid dividends, as did only 8 of 58 rubber plantations and only 3 out of 49 diamond mining companies. At the height of the British Empire in the early twentieth century, the British invested more in the United States than in all of Asia and Africa put together. Quite simply, there was more wealth to be made from rich countries than from poor countries. For similar reasons, throughout most of the twentieth century the United States invested more in Canada than in Asia and Africa put together. Only the rise of prosperous Asian industrial nations in the latter part of the twentieth century attracted more American investors in that part of the world. Perhaps the strongest evidence against the economic significance of colonies in the modern world is tha
Comments
Post a Comment