Markets in nothing: El Bulli
Economics appears to have failed today. El Bulli (" the world's best restaurant ") is permanently closing in December 2011 . According to owner Ferran Adria, it's because they are losing half a million euros per year. This poses two problems for economic theory. First - why is it losing so much money when demand is so high? The 48-seat restaurant has a six-month season with about 8,000 covers a year. It receives 300,000 applications for those seats [though this article says a million and this one two million ], selling out the whole year's reservations on the same day that bookings open for the season. Why wouldn't they bump up the price from 230 to 330 euros, to simultaneously manage demand and eliminate the losses? Price elasticity can't be that high. Second - why is there no resale market in the small number of reservations available? Neither the US nor UK Ebay site has any results for El Bulli, except a few copies of the cookbook. Normally, w...