What the hell\’s wrong with arbitrage and speculation?

Norway is one of the world\’s most expensive countries. Supermarkets in the south however trying to lure local customers by undercutting rivals on the price of nappies inadvertently made it profitable enough for residents of nearby countries to start trading in them.

Norwegian diapers cost as little as 30 crowns for 50, less than half of the prevailing price in Lithuania. Coincidentally, the internet is heaving with Lithuanian sellers advertising Norwegian nappies.

Ricardo proved right again, that iron law of one price.

11 comments on “What the hell\’s wrong with arbitrage and speculation?

  1. From the article “It’s not stealing and it’s not even criminal but it’s a big problem, … they leave nothing for our regular customers. ”

    It’s not a big problem. Just put up your prices if you want to keep some for your regular customers. The Liths will stop coming. If you are more interested about the money which you are obviously making from the turnover of nappies then shut up about your regular customers and problems.

  2. A quick and dirty bit of arithmetic. 80,000 nappies take up about 25 cubic metres. That’s quite a big truck (a 4 tonner or so).

  3. ljh, you’re right Lith is not near Norway. Nor is there any ferry from Klaipeda to Norway. Lots to Sweden, but none that I can see to Norway. Did the Tele journo get his Scandinavian countries mixed up?

  4. This is happening in Hong Kong, because the quality of goods in the mainland cannot be assured. The solution is to raise prices and increase production.

  5. Struck me the transport costs might make it unworkable too, but I’ve seen this kind of thing on a local scale in Prague – Tesco own-brand goods sometimes appear at their normal price or slightly higher in Viet corner shops shortly after being heavily discounted in Tesco. Own-brand stuff stands out a mile on the shelves, that’s why I noticed it, but it would not be surprising if they used other, similar sources too.

  6. Well, British supermarkets are used as wholesalers by Nigerians, who bring the stuff back home in suitcases and flog it retail in their own supermarkets. Two things I have found which are not uncommon:

    1. Nigerians in a British supermarket buying a whole trolley full of the same product, e.g. nappies.

    2. Tesco or Asda branded goods on sale in Nigerian supermarkets, market up by 100% or more.

  7. When I worked at a supermarket after school in NZ, I’d see it from dairy (cornershop) owners, they’d come in and stock up on a loss-leader promotion of things like bottles of Coke.

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