Why are women’s dry-cleaning services more expensive than that of men’s?

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As observed in our everyday lives, often times, we can see that women’s dry-cleaning services are priced slightly higher than that of men’s. this phenomenon caused me to rethink economically about pricing. Since the service is similar, what caused the difference between the two genders?

As learned in class, the price is determined by the market demand and supply. The following graph showed that if market supply is lower, the price is higher. In addition, if the market demand is higher, then the price of the service could also be higher.

From this graph, we can see that the first explanation to this phenomenon is that there might be higher demand for women’s dry-cleaning services and that women are willing to pay more in this service. If there is demand at a certain price and if the demand is inelastic, then the price can be raised high. Pricing is inelastic means that by increasing the price of women’s dry-cleaning services, the demand will not decrease as much and will not negatively affect overall revenue.

Then, on the other hand, supply is also an important factor because women’s clothing is more varied with different styles. These created more difficulty in the procedure of dry-cleaning. The cleaners have to adjust their techniques and methods to cater to different kinds of clothing for women. So, the suppliers are not willing to supply the service for a cheaper price. Only at a higher price are more suppliers willing to offer the service compared with the dry-cleaning business for men. Therefore, the equilibrium point at the above graph is higher than that of men’s.

The black lines D0 and S0 represented the supply and demand for men’s dry-cleaning service while the red lines, D1 and S1 represented the supply and demand curves for women’s dry-cleaning service. The resulting price for men’s service is at p0 while the equilibrium price for women’s is at p1.

In addition to the classical demand and supply explanation, there is another economic concept called price discrimination. In this specific case, this is gender pricing discrimination. Not only dry-cleaning services, but also services such as price of clothing, price of hair-cut also exhibit this gender price discrimination. The firms know the preferences and behaviors of women and took the opportunity to raise the price for women. This issue has been evidenced many times in the past and has been brought to courts. Although there is no national law regarding gender price discrimination, there are laws at the state level and many states prohibit this act. Price discrimination is still happening everywhere in the market and as long as the customers are willing to pay a higher price, the firms can charge at a higher price.

As mentioned before, the dry-cleaning service is inelastic, and it might be even more inelastic for women because women cared more about their clothing. Although men might have more suits to dry-clean than women, they might not care too much about outside appearance than women. The fact that women’s demand curve is even more inelastic gave the firm more opportunities to price discriminate.

In addition, raising the price can have both income effect and substitution effects. The income effect is when the price of the goods increased, causing real disposable income to decrease, and customers would therefore decrease their consumption. However, in this case, apparently the price of dry-cleaning is only minimal and is not enough to cause a huge stress for people who really cared about their clothing. Therefore, the impact of the income effect is not large. The substitution effect occurs when the price of dry-cleaning service increases and women have to seek other substitute products, such as wet cleaning. However, those who went for dry-cleaning apparently cared for their lifestyle and will not ruin their clothing with wet cleaning if they were supposed to be dry-cleaned. Therefore, the demand is inelastic, and women will not seek other alternatives. So, increasing the price actually increased the overall revenue, creating incentive for the firms to price discriminate the women.

As a result, due to a costlier procedure for dry-cleaning women’s clothing, more inelastic demand, and more preference problems exhibited in the women, the women’s dry-cleaning service is often observed to charge a higher price than that of the men’s dry-cleaning industry.

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