Not marked for resale and why it may not be a bad thing

If you have ever bought goods in bulk such as a box of ice cream sandwiches, you may notice on that on the label it says, “not marked for resale.” Obviously, the manufacturer does not want people to buy and distribute their goods, and equally as obvious, it’s making them more profits when they sell by bulk. I should note that the reason for why they’re earning more money is not because it’s cheaper for them to sell by bulk (although in certain cases that may be true), but because they are second degree price discriminating. This particular form is called menu pricing, and it works by separating high demand and low demand consumers by offering different packages at different prices. Someone like a mother of four who wants a lot of the good will buy the bigger package at a lower average price per unit while people such as a single bachelor who want less buys the smaller packages. To stop people from buying the larger package and reselling it to turn a profit (this is called arbitrage), they print the no resale labeling. Now whether or not this is enforceable by law, I am uncertain, but uncertainty alone can discourage people from attempting to resell.

At first glance, this may seem like the companies are inefficient since they are not selling close to their marginal cost when selling the small packages, and it may well be true because there might be fewer low demand consumers buying. Conversely, under regular monopoly pricing, the firm may set a price that excludes much of the high demand. It is unclear unless we compare what would happen when there is no price discrimination. The deciding factor is simply a matter of quantity. Do they sell more or less under menu pricing? What we do know is that menu pricing is not always bad.

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3 thoughts on “Not marked for resale and why it may not be a bad thing

      • My summer has been quite slow. I’m working part-time as a tutor and looking for real employment. You know, full time, and stability. I’ve missed going to school though. I found this spiffy little site, you should check it out if you’re bored for the summer. Also, how is summer treating you?? Website is here: https://www.coursera.org/

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