Sunday, September 30, 2018

Are Supermarkets a public good?


Currently and unfortunately a common word that the media uses to describe Venezuela is “chaos”. Even though it is my beloved home country, I agree the root of such chaos is heavily due to severe market failures that continue to go unnoticed. There is a lack of medicine, food and toilet paper; you name it and Venezuela does not have it…. or does it? It has come to my family’s attention that even though the majority of the population is lacking means to purchase necessary supplies at regular supermarkets, there are government sponsored supermarkets that have products but are only open to Carnet de la Patria or the Homeland Card (HC) holders. For this reason, I ask myself and my peers, “Are supermarkets a public good?”

A single trip to the supermarket in Venezuela means spending 50-70% of minimum wage… this is monthly minimum wage that was actually increased 5X in August 2018 and it is still not enough. I would think that supermarkets in general are an example of a semi-public good, meaning they are non-rival and non-excludable. Similar to a highway which is open to all cars in spite of traffic, it is quite rare that a supermarket will keep out customers, thus it is non-excludable. Supermarkets are semi-non rival given that they stock large amounts of a single product where it is likely for two individuals to purchase same products. In Venezuela however, the public good trait of supermarkets is being challenged, where supermarkets with accessible foods are becoming excludable and semi rival.    

Now days in order to be part of the lucky individuals that can obtain food at reasonable prices, you MUST get the HC. This unique card grants you access to special “Clap Bags” in government supermarkets that contain everyday products at almost one tenth of regular priced items. These are only limited to those who have the HC and they tend to run out pretty fast. Having the HC not only means this privilege, but you are also automatically registered to vote for the United Socialist Party of Venezuela. So basically if you are a person living in Venezuela and want food at accessible prices, you need the magic HC. I thought that supermarkets were public goods, but now I have realized that the Venezuelan government has strategically linked politics with the need to eat, making them semi-rival and excludable.

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