Saturday, July 18, 2009

Economics of love

Disclaimer: Its not recommended to take advice on love and economics from a moron who's only idea of a romantic conversation is following a celebrity and her dog's tweets.

So we were given this almost 2 month break in our MBA to get *practical* experience of whatever we learnt in the past year or so in our MBA. Being the very serious student that I am ;) I decided to use that to understand my barren and lonely life.

Economics talks about a monopolistic competitive market. In such a market there are many sellers each with a slightly differentiated product. The market permits free entry and exit of sellers until an equilibrium is reached (that is all the products that the sellers have to offer, have a buyer). Any more information you need, I recommend reading Mankiw’s book on economics.

The market for love in this capitalist world of ours, follows a similar trend. Guys in living beings are the sellers and women are buyers (I don’t want any arguments on this considering that in every species the guys have to go and woo the gals while they sit pretty and enjoy the show!).

Now I classify this market as a monopolistic competition because not every guy is exactly the same. Everyone of us is unique in someway or the other (not necessarily good!). So when you go after your target buyer (in this case a girl) you as a product have to appeal to the gal that you are selling yourself to.

The first lesson that any guy in this market has to understand is that there is no first mover advantage. The fact that you noticed the gal who you are going after means that she has already been approached by a million other sellers like you. So for her to show interest in you, you need something called your “competitive advantage”. Something that you can or have different than your nearest competition. That leads us to SWOT analysis of yourself. So before you even think of going after a gal, you have to identify your competitors and do a competitor analysis  and then find your strengths!

If you walk, talk and look like a melodramatic gorilla on steroids and try to be Mr. Nice Guy; you don’t have much of a competitive edge over the nearest Tom, Dick or Harry. This brings us to the other concept of a marginal seller. A marginal seller is the first guy to quit the market because he is already operating at the margin (in this case he has nothing to impress the gal!). So my advice to such people is – if you have nothing to market about yourself – stop praying for divine intervention and exit the market. You might as well channel your energy and your time to chase gorillas.

Finally – my take on monopoly in the market. These are guys who look like Greek Gods and are just too good to be true. You can act pricy and choose the buyers, cause in your case the buyers don’t really have a choice.

So I hope you took my advice seriously. This also brings me to the point that I tried to combine my learning in Strategy, Finance, Economics and Marketing in one single post. My next blog post is going to be on how to *sound* like an MBA while you are bull$hitting :) !!


  1. I am sure you must have understood by now that, monopolistic market is not very efficient. The cost of being in the market far exceeds the benefits, so you are'nt missing much by being in this market.

  2. I don't agree. Monopolistic markets are not efficient is true. According to my argument, I (the guy) is a seller in the market. The dead weight loss is in favor of the sellers in this market. So though, the market is not efficient, it is aiding the sellers and not the buyers!

    Anyway, sorry for putting economic theories in a stupid blog!