1. 3 years ago

    The Golden Football

    The Golden Football is a new description by Evan Miller of the economics of GroupOn. The idea is that GroupOn moves the economic activity to the right of the normal micro-economics price/demand curve by offering up a lower price than the market has settled into charging for that particular good or service in exchange for a higher volume than the market would normally demand for that good or service at that lower price.

    groupon-golden-football.png

    The Golden Football is formed from happy customers getting a price lower than they’d pay…

    groupon-indifference.png

    And from business getting more quantity of sales than the price would normally generate, and therefore more profit.

    groupon-isoprofit.png

    It’s an interesting model, and very different than the loss leader / lifetime customer value story that’s normally told about GroupOn.

    All the graphs and the model are courtesy of Evan, I’m just trying to spread the word so that hopefully some enterprising economist will test the model or some entrepreneurs will validate it by applying it in new ways.

    economics