This story is a perfect example of the power of competition in a free market to reduce costs and expand options for consumers. My favorite store, WalMart, is taking on an up-and-coming rival, amazon.com. Guess what is happening? Yes, prices are dropping and we consumers are in the driver’s seat. Excellent! Here’s just one short-term gain for you and me that’s part of a long-term strategy that will, no doubt, generate even more great deals.
The tussle began last month as a relatively trivial but highly public back-and-forth over which company had the lowest prices on the most anticipated new books and DVDs this fall. By last week, it had spread to select video game consoles, mobile phones, and even to the humble Easy-Bake Oven, a 45-year-old toy from Hasbro that usually heats up small cakes, not tensions between billion-dollar corporations.
Last Wednesday, Wal-Mart dropped the price of the oven to $17, from $28, as part of its “Black Friday” deals. Later the same day, Amazon cut its price, which had also been $28, to $18.
“It’s not about the prices of books and movies anymore; there is a bigger battle being fought,” said Fiona Dias, executive vice president at GSI Commerce, which manages the Web sites of large retailers. “The price sniping by Wal-Mart is part of a greater strategic plan. They are just not going to cede their business to Amazon.”
A free market is the best friend of the consumer and the most potent kick in the pants for business to innovate and serve the consumer. It works in retail. And it will work in health care too — if we apply the consumer-driven model to reform efforts. That, of course, is the opposite of what ObamaCare will do.
JLF’s Joe Coletti discusses the power of consumer-driven health care in this brief interview.
