After 1.5 years, I leave Lovely dormitory of University of Indonesia . I start to think, what had I got from that place. The special one is about the canteen. At the first time, I try to enjoy the food that served in that canteen, there are five merchant in that with low level of differentiation ( at leash for my self). But, honestly for a boy, like me who grow up at West Sumatra that have many food with great taste, the food in canteen was very bad.
The next interesting condition in that time is about the price. While, I eat in first time, the price is really cheap. It was relatively wise and give me high consumer perceived value. As a naive person, I think, it is a great place to live. I don’t have to spend much money, since the rent of dorm is also cheap. Finally, I decide to live in dorm for two years.
In two years, i got some interesting condition in canteen. Unexpected condition is happen. The price of food in dormitory canteen is growing up, and hurt my life. Since try to learn economics, lately I knew,why it happen.
If I were know economics, I will decide not to live in dorm. The market condition (structure) on dorm, naturally make the merchant have high market power. It happen because there are more than 1000 student in dorm that served by only 5 merchant, and the condition of dorm, make the student is hardly to go anywhere to get another food merchant. Maybe simply we can call this condition as an oligopoly market. And, in reality, the price is very expensive lately in my first semester in this university.
The one big question is, why in the first time the price is very cheap? The Answer is simple. As a new student I can choose many place to life, If I knew that, the real price of the canteen is expensive, I will not choose to stay in that place ( may be some people will think like me). In Industrial Organization, we can say that in that condition the market is more contestable, the merchant cannot use full of market power, because we can easily move from dorm to other place. So they try to cheat some of student by making relatively cheap price and make them choose to stay in dormitory. After you have stayed in dorm, it will hard for you to move to other place. It was part of their strategic behaviour to compete in the market and got higher long run profit.
Now, I just thinking, Market Structure tell us everything. It is weird for the merchant for making cheap price without other motive. An anomaly like that had to be something to explain. If I know it before, surely, I will not fooled by the market.
"The one big question is, why in the first time the price is very cheap?" According to your answer of that big question, I will say that merchant in dorm will always try to decrease price in every year to attract new student. I doubt about it. I think low dorm rent price is enough to attract new student. -rangga-
ReplyDeleteWell, if you talk about College Student, the things that come out first when buying something is the price, that's for the first impression.
ReplyDeleteAfter that, your taste talkin'
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Anton Hermansyah
Fakhrul, Your proposition implies that living in dormitory is indifferent from living outside dorm. The difference is just on the composition of your consumption. Therefore, this indicates that value-perceived of living in the dorm is as same as living outside dorm since the ratio of marginal utility between housing consumption and food consumption (thus the ratio of price between housing and food) when you lived in the dorm is as same as that of living outside dorm.
ReplyDeleteIn conclusion, you have no incentive to move out from dorm.