Monday, April 27, 2009

Buy This House, and Get a BRAND NEW CAR !!

If you purchase this former Parade of Homes property in West Michigan, the sellers will toss in a brand new Chevy Malibu to sweeten the deal.


Now, as a professional economist, I know at least two things that have bearing on this matter:

(1) Generally speaking, payments of money create greater welfare-enhancing possibilities than do payments in kind (i.e., stuff). You can spend money on anything you want, in whatever increments you want. "Stuff" is less liquid.

(2) Presumably, from a potential buyer's perspective, there is some lower price the sellers could offer for the house that would make a buyer just as happy as finding a new Chevy Malibu in the driveway following the closing.

And knowing these two things as an economist reminds me how little I understand about marketing.

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