Markets in everything, dining edition

Don’t take no for an answer:

New services that sell reservations are also cropping up., for example, books tables at top Manhattan restaurants and resells them.  Buyers pay a $450 annual membership fee plus about $30 per reservation.  The site, which specializes in last-minute reservations, was launched last year by Pascal Riffaud, a former concierge at the St. Regis in New York and the Ritz in Paris.  Mr. Riffaud says he won’t reveal his technique for getting tables.  When diners sign up they get a welcome email explaining that reservations are made under fake names.  This is so they can be secured in advance.

Here is the story, which also claims that four weeks’ out is the best time to get a table at a popular restaurant. 

Reservations are hard to get at top restaurants for at least two reasons: restaurant owners want a table to be seen as a status good, and the restaurant knows that who gets a table affects the long-run reputation of a restaurant.  Many restaurants, for instance, don’t want too many tourists, or too many ugly people.

Do non-market-clearing prices, in this instance, boost social welfare?  The reservations market, by allowing people to buy themselves into the queue, lowers the overall ability of restaurants to build up their images.  On the other hand, the queue-breaking may be limiting what is otherwise excess product differentiation for the purposes of increasing market power.

Or we could fall back on a simple libertarian rule: if the restaurants consider the practice (obtaining a reservation under false pretenses) fraudulent, don’t allow it.

Speaking of reservations, here is a new underwater restaurant.


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