Economics in India

Over Spring Break, I was fortunate enough to travel to Bangalore and Mysore India after being part of Washington State University's Global Case Competition last year. The focus of the case competition was to advise a transnational corporation on doing business in Delhi, India. Unbeknownst to us at the time, our participation in the competition would earn us a sponsored trip to India!

While in India, we visited businesses (Infosys, Wipro, & NextDrop) as well as institutes (India Institute of Management and India Institute of Science). Overall, a thoroughly fantastic journey. If you have any questions, please feel free to comment below!

Now for the economics! While the obvious examples may jump out at you (poverty, income inequality, technology, etc), I love pricing strategies. This shouldn't be a surprise to people who flip through my other posts, but I wanted to share with you three different photos I was able to capture. I'll admit, most of my attention was focused on things other than economics.

On the fourth day of the trip, we ventured into Mysore, India, home of the Mysore Palace. Let's just say that the Royal Family recognizes that foreigners are willing to pay a premium to visit their residence and ride their elephants (see below).

While many of you may not know the Rupee/Dollar exchange rate by memory, I can tell you it's approximately 50 Rupees for 1 US dollar. While not exact, it was the ratio we used to make quick calculations. The shock at the front gate was pretty large because I'm not sure any of us expected to pay five times the price of Indians. While alarming at first, we all begrudgingly handed over our Rupees and realized that about $4 wasn't too shabby after all.

And then some of the people in our group decided to ride elephants, and the Royal Family was ready again, but this time the cost wasn't as drastic. I imagine if it was 200 Rupees, we still would have ridden them!

On the final night of our trip, Rossetti and I ventured to MG Road in Bangalore for some last minute shopping. After spotting a Krispy Kreme on a previous night, we knew a trip to India wouldn't be nearly as fun if we couldn't say we had a donut. Low and behold, Krispy Kreme in India offers rebates for bringing your own bags:

Every time I've seen these implemented, they always appeal to our "green" side, but really it's a cost saving tactic. If companies can convince you to bring your own bag, it lowers the cost of providing bags for you. My understanding is that 4-6 Rupees is a significant price in Bangalore, and equivalent to the 10 cents many US supermarkets offer. It was also a great excuse to share the photo with a former WSU SES grad student who does research in this area.

Everyday Economics - Bank of America

I've challenged my Principles course to find economics in their everyday life. For the most part, they've all done an excellent job, even if some of them have worked in backwards. To make sure I wasn't asking too much, I tried it myself, and it didn't take long (granted I'm getting a PhD in this, so it's a little easier). As I went to the bank today to withdraw money from the ATM, this note was pinned to the teller window:

Last week we discussed monopolistic competition and how firms try to differentiate themselves from their competitors through various means. One of the results of many monopolistically competitive firms is the excess capacity generated by trying to achieve the lowest average total cost. In the case of Bank of America, it appears that they are attempting to lower their average total cost by discontinuing the drive-thru service. Not long before the date above, a new bank opened in Pullman, implying there must be some short-run profit in the banking industry. Perhaps this is a ploy by BOA to maintain their profits through cost reduction.