This is pretty staggering news:
According to experts, the Connecticut-based franchise, which arranges skewered pieces of fruit into displays vaguely resembling floral bouquets, has defied all modern economic models, expanding continuously for the past decade despite its complete lack of any discernible consumer appeal.
“In theory, the market should have done away with Edible Arrangements long ago,” said American Economic Association president Orley Ashenfelter, who added that one of the crucial assumptions of capitalism is the idea that businesses producing undesired goods or services will fail. “That’s how it’s supposed to work. Yet somehow, despite offering no product of any worth whatsoever, this company not only makes payroll every week, but also generates strong profits.”
[…]
Upon examining the so-called Edible Arrangements paradox, economists worldwide have abandoned many of the ideas that have dominated economic thought since the time of Adam Smith, arguing that the forces of supply and demand are powerless to explain the company’s 45-piece line of officially licensed NASCAR-themed fruit bouquets.
“To understand this enigma, we must discard the naïve notion that free-market prices reflect what consumers are willing to pay,” Nobel laureate Joseph Stiglitz said. “Otherwise, how else are we to rationalize the phenomenon of a human being willingly spending 84 bucks on 18 green apple wedges and a Mylar balloon?”
An unofficial survey conducted by Stiglitz found that not one of the AEA’s 18,000 members had ever purchased or received an Edible Arrangement or knew of anyone who had, indicating that the franchise was operating in “some advanced realm of economics” in which the so-called profit motive no longer applied.
I look forward to seeing how this paradox is resolved.
