Chapter 130 Question 118

Why is Target heavily promoting prescription drugs from its in-store pharmacy? (Kate Champstein) Target offers a wide range of products, many of which are advertised and promoted.But the store is especially focused on promoting prescription drugs from its in-store pharmacy: Whenever Target opens a new location, it distributes a flood of promotional coupons, many of which are linked to the pharmacy. (Transfer your prescriptions to Target and save $10 on your next purchase.) Why? After the customer shows the prescription to the pharmacist, if he is lucky, he can wait five minutes to get the medicine.But if the counter is busy at that time, you may have to wait for more than 20 minutes.If the customer is rational enough and expects to wait in advance, he will bring some reading materials to pass the time.And Target's managers seem to realize that most customers simply don't think so far ahead.They also know that this type of customer is not going to sit and wait while they wait for their prescription to be dispensed.Since there are a wide range of products around, the average customer will choose to visit the supermarket.So, attracting additional customers to the pharmacy is also an effective way to get them to buy other things.

Chapter 6 contains several examples of how laws and regulations reconcile individual and group conflicts.Another approach is to make groups obey social norms that balance individual and group interests.If there are more people waiting in line for the bus than there are seats on the bus, chaos can ensue as people scramble to get seats.But no matter how hard people rob, the number of seats in the car remains the same.To solve this problem, the Commonwealth of Nations has established a social norm where everyone knows that the person at the front of the line gets the seat first. This norm improves efficiency and promotes social harmony.However, as the last few examples in this chapter show, the first-come, first-served norm can sometimes produce unwelcome results.