South-Western EconNews

Something for that person who has everything…

Subject

new toothbrush sanitizer hits the market

Topic

Profit maximization and the firm; Monopolistic Competition.

Key Words

toothbrush, ultraviolet light, sanitizing.

News Story

Violight, a new company in New York, has created a toothbrush sanitizer. While it’s not the first on the market--the first such product was about 3 times larger than Violight’s--it is the first to attain relatively broad market appeal. While some may sanitize their toothbrushes by running them through the dishwasher, rinsing them with Listerine, or – perish the thought – throwing them away and starting with a new one after a while, Violight’s owner feels that he is appealing to those who want to be able to sanitize their brushes often and in the bathroom.

Running on a charger similar in style to that of an electric shaver, the sanitizer uses ultraviolet light to sanitize toothbrushes the same way that hospitals sterilize instruments. The device currently sells for about $50, and the company has sold approximately 100,000 units since the units became publicly available in October.

Questions

1.	Given that similar results can be found by running a toothbrush through the dishwasher (at a marginal cost of zero), why do you think that people will be willing to pay $50 to buy a product to accomplish the same goal?
2.	Since this firm is profitable in a monopolistically competitive market, what would you expect to happen to its profit over the longer term? Why? What is it about this kind of market that would lead you to this conclusion?
3.	Is this a complementary good or a substitute good for a toothbrush? Why?

Source

Brendan I Koerner. “Zapping that Icky Toothbrush.” The New York Times. 16 January 2005. http://www.nytimes.com