In July 2013, I wrote a post on EconLog titled “The Economics of Self-Imposed Price Ceilings.” The case in point was the Costco hot dog. I pointed out that by keeping the price of a hot dog and a soda with free refills at $1.50, Costco over time, to reduce losses, reduced the quality of the product. I might have been wrong in saying that the new hot dog is inferior to the old Hebrew National brand. The brand that Costco shifted to is still quite good.
But I was not wrong in saying that Costco quit letting the customer turn a crank that yielded sauerkraut and instead put sauerkraut behind the counter.
Two further changes have happened, one that I noticed in the last year or two and one that I noticed today. At some point in the last year or two, Costco discontinued the behind-the-counter sauerkraut.
Today, I noticed another change. Costco has discontinued the onions that you used to get by turning the crank. So now all you get is mustard, ketchup, and relish.
In case you’re wondering, of course I’m not advocating that a government agency regulate Costco’s choices about hot dogs. I’m simply pointing out predictable consequences of price freezes in a time of inflation even when the freezes are self-imposed.
