On another index, New Zealand's dollar is massively overvalued. The Economist offers Digital-Only subscriptions that are as identical across countries as is the Big Mac. Having finally decided to shell out for a subscription, I was taken aback by the subscription rate on offer: their best deal was $1020 for a 3-year subscription.
After some consideration of what intrafamily bargaining would need to take place to justify a $1000 subscription, I checked what the cost in the US would be.
The best NZ subscription rate works out to USD $4.49 per week, using The Economist's January exchange rates as reported in their Big Mac Index files. The American subscription rate is $2.19 per week: less than half. So the New Zealand dollar would have to halve in order for the NZ subscription rate, in $US, to match the American rate.
On a busy Monday morning, I had only time to check a dozen or so subscription rates. The weekly $US subscription price is below, with all exchange rates coming from The Economist's January Big Mac Index. Note that Argentina, Brazil, Chile, Columbia, Costa Rica, and Egypt quote prices in $USD: $1.94 per week.
At least I do not live in Australia.
And now to investigate whether I can geounblock things and pretend to be US-based or, better yet, Canadian.
Update: I'd made an attempt at a US-based subscription before figuring out that Canada was slightly cheaper. My NZ credit card worked just fine with a US address. So now you know.
Being an Aussie, it reminds me of a post from a now extinct blog in 2011. Back then we were looking at the print prices of The Economist:
ReplyDeletehttp://imgur.com/RCYNIZq
And how many burgers you would need to forgo to buy a copy of that newspaper:
http://imgur.com/SzTj1cM
No surprise in some profit maximising price discrimination going on here, especially from the Economist...
ReplyDeleteOnline shops for clothes and other goods show the same kinds of bias. It might be an interesting exercise to do a price comparison on a basket of identical goods from identical stores by switching the country. I think I did this for clothes through JCrew when they opened in Australia - and Oz had a 50% premium over the US, and Singapore had an 80% premium.
A few years ago, I remember an American being visibly shocked when I told him how much I paid for the Economist in Australia. Back in 2010, that was three times what he paid.
Oh sure. Post to follow on the price-discrimination rationales. Has to start with potential for cannibalising print sales, and how print prices vary. And also expect price elasticity of demand to be lower in small open economies than in the USA - more important to know what's going on in the world if you live in NZ than if you live in the US.
ReplyDeleteInteresting that you say about small country effects on price elasticity. I wouldn't have made that link (and I'd be interested in you breaking that apart a bit more).
ReplyDeleteJust an observation, but every time I go to NZ, the theme of 'small country effects' feels like it permeates lots of issues in a way that is only a tangential issue in Australia and a non-issue in Europe or North America. Almost like its a zeitgeist sort of thing, which people outside of NZ don't even think about. But when you're in NZ, you really feel like you're in a very small country at the end of the earth sometimes. Maybe that's just me.
Perhaps as if to sort of demonstrate the issue, Australia used to have many single export desks for agricultural commodities - but these are all gone. In Aus, nobody seriously makes the argument that Australian farmers need a collective gorilla on their side to get a better deal in a big bad world that's far away any more, but I understand that used to be the case.
NZ used to have those too; they were abolished in the 80s barring one for kiwifruit that continues.
ReplyDeleteSmall country effects matter a lot here. I wish folks better appreciated just how much work our open consumer trading environment does to offset small market low-competition inefficiencies. To a large extent, consumer direct imports from abroad constrain the dominant retailers' prices. It's really obvious in books and electronics. If we ever do something dumb in this space, like reducing the threshold for GST application to imports and making it then harder to get goods in, it will make a mess.
A VPN should do it
ReplyDelete