Should We Protect Ourselves From Dreaded Free Shipping?

Paul Gift —  18 December 2007

In France, it has been ruled that Amazon can no longer offer free shipping on book purchases. Don’t you just love it when competition policy protects certain competitors instead of actual competition? The protected competitors here are “vulnerable small bookshops.” Last I checked, the essence of competition is that “vulnerable” or inefficient competitors are supposed to be likely to go out of business. That’s the whole idea of promoting efficiency, innovation, economic growth, and enhanced welfare. The reason they’re vulnerable in the first place is that consumers in the market reveal that they more highly value the product characteristic bundle of other alternatives.

Personally, I have a love/hate relationship with this policy. I hate the “backwards” economics it promotes, but I love the fact that I get to make fun of it on TOTM. Death to free shipping, free samples, free coffee, loss-leaders, and, while we’re at it, Wal-mart rolled-back prices too!

See here.