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Menu costs and fixed contracts are not necessarily sufficient to explain what happens in such cases - they may be sufficient in the coke bottle example here, but they are insufficient for a similar story here in Germany.

Prior to the introduction of the Euro, the price of a standard bar of chocolate has remained constant for around 50 years. The size of those chocolate bars was also fixed, unlike the Hershey's example somebody else mentioned.

The single most relevant factor explaining this is psychology: the price of chocolate was very much ingrained in people's minds, and people simply rejected the standard bar of chocolate above a price point of 0.99 DM.

Chocolate manufacturers had to squeeze the last bit of efficiency out of their production lines, and turn to larger chocolate bars with special gimmicks or other chocolate-related products for making a decent profit.




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