Brian Dickerson: Price of gas tied to where you pump it -
[Cached Version]
Published on: 6/20/2001
Last Visited: 6/20/2001
Patrick Higgins , the retail marketing director for McDonald's of Southeast Michigan , told me all metro Detroit franchisees buy their buns , meat and condiments from the same suppliers , and at the same prices.But franchise operators set their own retail prices , taking into account such diverse factors as the cost of real estate , the availability of labor , and the proximity of competitors.
Selling gasoline and selling hamburgers are two very different businesses , but the Big Mac story does reveal a few universal economic truths.
One is that wholesale commodity prices are only one factor in retail pricing decisions.Another is that local market conditions can play a surprisingly large role in those decisions.