Saturday, July 22, 2006

An Undercover Economist on a Cruise

On the last day of my most recent vacation trip, I took a cruise along a short stretch of the Danube and the channel that runs into Vienna. I had read Tim Harford's wonderful 'The Undercover Economist' on the flight over a couple of weeks before, and the discussion of price discrimination was fresh in my mind.
I casually looked at the refreshments menu, and missed a key point, but finally noticed a fascinating instance of what he talked about.
Here is the wine menu:

If you click on it to enlarge it you can try to find what struck me.
Here is a section of the menu for wine by the glass:

By the glass, I can get Gruener Veltliner (likely my favourite white, a dry Austrian variety) for 2.80 Euros - each glass is a Viertel - a quarter of a liter.

Here is a section of the menu for wine by the bottle.

What does a 750ml bottle of Gruener Veltliner cost? 22.00 Euros. So you can get the equivalent of three glasses for 8 times what you would pay for the same variety of wine by the glass!

Now of course the wines come from different wineries - otherwise there is no way the cruise company could expect anyone to order the wine by the bottle. (OK so there may be some people who cannot figure out that a quarter of a liter is 250 ml and that 750 ml is three times that, but you don't want to build a business on that.) This distinction is not too terribly different, I think, from Harford's example of Fair Trade coffee - no, I won't explain, because I think you should buy and read his superb book.

What I do know is that the wine by the glass tasted just fine.


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