Robert Frank: Here’s another product-design question, this one posed by my former student Brendan Quigley. “Why,” he asked, “are newspapers, but not soft drinks, sold in vending machines that allow customers to take more units than they paid for?”
If you put four quarters into a soft drink vending machine and push the Coke button, a cold, twelve-ounce can of Coke will tumble down the chute. If you want a second one, you’ll need to deposit four more quarters. In contrast, if you put four quarters into a newspaper vending machine, the front door of the machine opens, providing easy access to the entire stack of today’s edition of the New York Times. You’re entitled to take only one, of course, and most customers observe that limit. But why are newspaper machines built to such low security standards?
The obvious advantage is that such machines are much less costly to build. There is no need for complex mechanical devices to feed a single newspaper out through a slot. The coins trip a simple lever that releases the latch on the machine’s front door, which resets once the door is closed. Soft drink vending machines would also be cheaper if constructed in a similar way. So the reason for the difference in design must reside on the benefit side.
The key distinction between the two products is that whereas a dishonest consumer would benefit from taking more soft drinks than he paid for, he would have little reason for taking more than one newspaper. Having ten copies would make him no better off than having only one.
Robert Frank’s latest book, The Economic Naturalist’s Field Guide: Common Sense Principles for Troubled Times, was published last month. He is guest-blogging for the Business Desk for the next few weeks.