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Embracing the anti-bargain

Over the weekend, I made my summer pilgrimage to see Circus Smirkus, a traveling show in which talented youths perform daring trapeze acts and other gymnastic feats.

My 5-year-old daughter made her customary bid for cotton candy (It's the color that gets her).

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I obliged, shelling out $3 for some spun sugar that, once condensed, occupies about as much space as a single jelly bean.

Some circumstances - circuses, ballgames - seem to call for such bursts of extravagance, and demand that we disregard the pretty astounding profit margins set by peddlers of certain goods.

But consumers also swallow major cost markups on a daily basis. Calculate, if you dare, what it costs the local doughnut shop to brew your daily tap-water decaf.

It's no great mystery. We place a towering value on convenience. It outweighs our instinct to look around for bargains when it comes to "the small stuff."

(We still dig for deals on many big buys, however. Consider this: Discount stores and wholesale chains now represent the bright spots in an otherwise bleak retail sector, as investing writer Guy Halverson points out on page 13.)

In the spirit of fun, we've lifted the lid on the popcorn business. Other goods receive monster markups, too. With apparel, it's often 100 percent or more. Retailers often pad to allow room for later "markdowns" that fuel sales.

"Probably the highest is diamonds," at about 400 percent, says Gayle Marco, an associate professor of marketing at Robert Morris College in Pittsburgh. "Not because they are rare, but because [supply is] so tightly controlled."

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With gems as with snacks, we consumers drive demand. Price? Whatever the market will bear.

(c) Copyright 2001. The Christian Science Monitor


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