The Price of Eyeglasses
I recently bought two pair of prescription glasses from an online source that had been recommended to me. The total price, shipping included, was about $40. I estimate that buying two pair at one of the less expensive local sources, such as Costco, would have cost at least five times as much, perhaps more.
This raises an obvious puzzle--why are they so much more expensive bought in the usual way. If Zenni Optical can sell them online for under $20/pair, why doesn't someone set up selling them for, say, $40/pair in the mall and make a fortune on volume? Three possibilities occur to me.
1. The online glasses are of inferior quality. So far as I can tell--I'm wearing one of the pairs at the moment--that is not the case.
2. Economics is wrong; markets don't work. Consumers are irrational, or so badly informed that they wouldn't notice if one seller cost less than half as much as another, or ... . This does not strike me as plausible.
3. Competition among ordinary sellers is constrained by regulatory rules, probably at the state level. I know there is some regulation of the industry but don't know the details. Given that I am both a libertarian and an economist this strikes me as the most plausible explanation.
Does anyone have more information on the subject?