Currently, I am sitting in Alderman drinking a Diet Pepsi that came with my Chinese dinner special. Although it was “free”, I cannot stand the taste and am about to run down to the basement to buy a Diet Coke, incurring both the cost of having purchased 2 sodas and the loss of studying time. Clearly, (Diet) Coke and Pepsi are not perfect substitutes to me.
Debates over taste preferences aside, the competition between Coke and Pepsi seems to represent a practical application of Downs’ Median Voter Theorem. Coke and Pepsi are homogenous goods operating in a duopoly. In their attempt to gain customers, Coke and Pepsi have essentially just raced towards the median consumer-voter. Both companies sell the same variety of bottle shapes, a variety of similar flavors, and advertise and sponsor big events in similar ways. To the naked eye, and indeed to many restaurants, they are perfect substitutes.
However, returning to the question of taste makes me question this application of the median voter theorem. According to the “Golden Straitjacket” theory, by needing to provide the same basic ingredients (or political policies) to their customers (i.e. sugar, bubbles, caffeine, that “cola” taste), Coke and Pepsi, like political parties, have converged and it is hard to find differences between the two. But if this were the case, shouldn’t the formulas (or ideologies) of each drink also have converged, and therefore shouldn’t I be just as fine drinking a “free” Pepsi as I am drinking a $2 Coke?
Perhaps, however, the Coke-Pepsi dichotomy offers hope for parties who advertise their ideologies rather than their policies, since Coke and Pepsi do in fact taste different. While they may look similar from the outside, they have managed to retain their true value – their original flavors. All I know for sure is that next time I order a Diet Coke and the waitress asks if Pepsi is okay, I will be saying no.
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