She Sells Sea Shells

With her basket full of sea shells, Kate walks out from the beach, away from the setting sun.  Her back is hunched and eyes are sore from finding sea shells underwater.  She seats down, facing the sun, next to five baskets full of sea shells, wondering how long she can do this before finding another job. 

Until last year, Kate enjoyed her job.  Picking sea shells from her private beach and selling them to people living in cities, was an innovative idea.  Her sea shells were great fashion items and called Kate an entrepreneur.  Whenever she went to the city to sell her shells, people made long lines to buy her shiny, white, shells.  Even when she increased to price from $3.50 to $4.00, her sales in volume did not decrease.  After few months of starting her business, Kate had enough money to rent a property to build her store, a new house, and a new car.  Everyone envied her, and she felt nothing could go wrong. 

             However, since the beginning of this year, her profit dwindled.  She had competitors selling sea shells.  Those sea shells were shiny and white, just like Kate’s sea shells.  Daniel, Mike, and Jennifer, who also owned properties around the beach area, just like Kate, saw Kate’s success in selling sea shells and began to pick sea shells.  Each of them sold sea shells near the city’s market area, across Kate’s sea shell shop.

             In the beginning, Kate was not concerned.  She had many accounts and loyal customers who loved her shells.  As time went by, however, she noticed customers leaving her shop and going to her competitors’ shops to purchase sea shells.  Customers started to visit every store before purchasing sea shells.  One day, overwhelmed with curiosity, Kate disguised as a customer and went to her competitors’ stores.

             As soon as she entered, she could not believe her eyes.  All stores were selling their sea shells for $2.00 per pounds, a half of Kate’s price.  At first, she thought their shells cannot be as shiny and strong as her shells.  However, as she examined them, she found out that their shells were not much different from Kate’s own.  As she was leaving from the last store, she decided to lower her price to $1.50 per pound.

             In a matter of days, customers came back to Kate.  She was not making much profit now, but she was happy to see customers coming to her to buy sea shells.  She nearly tripled her sales volume.  However, she now had to work more hours and harder to collect her shells.  Her shoulders and fingers were sore every morning, not to mention her red eyes from lack of sleep.  And one day, David, owner of David’s Sea Shells, Kate’s competitor, came to see Kate.

             David wanted to form a group of sea shell sellers.  David told Kate that if they form a group and act in unison, they would not have to work as hard and still make a good living.  After contemplating for a while, Kate decided to for a cartel with David, Mike, and Jennifer.  They set the price to $3.00 per pound and decided to collect only three thousand pounds per store per month.  They did not sign on any papers, but Kate considered them honest.

             For few months, business went well.  She made decent profit from selling her shells, and Kate’s cartel partners, David, Mike, and Jennifer, became friends with her.  However, she had another plan on her mind.  Since she was the first one to start sea shell business, she thought that she should make more profit than others.  So she decided to collect 3,500 pounds of sea shells, rather than 3,000 pounds.  She thought that her cartel partners would not notice her increase in sales and still make more profit. 

             However, the market did not turn out as Kate expected it to be.  The price of sea shells dropped to $2.88.  Her competitors started to question her for selling more shells than what they have decided to sell.  Also, her profit did not increase as she hoped to be, compared to more effort she had to put in.  And soon enough, her cartel partners broke the promise and also sold more shells.  Now, the market was supplied with 14,000 pounds of sea shells and price decreased to $2.57. 

             As she walks back, regretting her decision of selling more shells, she bumps into a guy.  He is not a handsome man, but with his suit and glasses, he seemed to know a lot.  So Kate shares her problems to find some comfort.  After talking to him, she found more than just comfort.  He gave her few suggestions to regain her profit and trust back from her cartel partners.  He also told her to decrease the production of sea shells and how price reflected demand and supply of the sea shell market. 

             As he leaves Kate, she asks what he does for living.  She imagines that with all the knowledge he has, he must be making millions of dollars.  However, contrast to her prediction, he tells her that he is far from being rich.  As he walks away, he tells her that he studies how society manages its scarce resources.  Kate did not know exactly what he does, but now, she had an idea or two to make her business more successful.