Why on-campus food is bad
I like to eat, and I like to eat good food and I don't mind paying good money for it. Personally, when it comes to food I think quality trumps quantity anytime. Sadly, when you are geographically bounded on campus the selection and the food quality is not so great, not that they are any cheaper either, any good food court in a mall can trump any of the so-called eating places here.
The question is why is the food on-campus bad compared to the selection off-campus? I don't think it's income differences of customers, not when you see the brand new cars that the new students brought to campus this semester. Most probably it has something to do with the monopoly provision of food services on campus. There is only one provider here, although you'd see that there are supposedly different food service outlets but they are all run by one company.
Everybody knows that when you have a monopolist (though not always bad) there is a tendency to ignore consumer demand sometimes, they just dont have enough incentives. They can choose to charge higher prices or decrease quality, either of the two reduces consumer welfare. They earn money from the sole contract alright, and my suspicion is the university splits this benefit with the contracted food service company. Why does the university do business this way? Is it costlier to negotiate with more businesses? (I'm sure a lot of food outlets out there would want to have a captive market of 20,000 customers not to mention access to low cost labor-students) Is it that the university finds it costly to say have tens of trucks delivering supplies on campus? Or are they motivated by the franchise fee the sole provider pays (but then again why not charge the same total amount of franchise fee among many players)?
Imagine if we had free entry into our food market here. I would imagine the competition for customers would spur eating places on campus to provide better service and better quality.
The question is why is the food on-campus bad compared to the selection off-campus? I don't think it's income differences of customers, not when you see the brand new cars that the new students brought to campus this semester. Most probably it has something to do with the monopoly provision of food services on campus. There is only one provider here, although you'd see that there are supposedly different food service outlets but they are all run by one company.
Everybody knows that when you have a monopolist (though not always bad) there is a tendency to ignore consumer demand sometimes, they just dont have enough incentives. They can choose to charge higher prices or decrease quality, either of the two reduces consumer welfare. They earn money from the sole contract alright, and my suspicion is the university splits this benefit with the contracted food service company. Why does the university do business this way? Is it costlier to negotiate with more businesses? (I'm sure a lot of food outlets out there would want to have a captive market of 20,000 customers not to mention access to low cost labor-students) Is it that the university finds it costly to say have tens of trucks delivering supplies on campus? Or are they motivated by the franchise fee the sole provider pays (but then again why not charge the same total amount of franchise fee among many players)?
Imagine if we had free entry into our food market here. I would imagine the competition for customers would spur eating places on campus to provide better service and better quality.
posted by F @ 1:54 PM
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