It used to be that every kid in the block had several pairs; nowadays me and my friends can barely afford two pairs. The technology today allows for a much higher supply, as well as an increase in demand due to increase in population (especially in cities). Not to talk about recycling technology…
The same question goes to Coke and its past awesome gifts/campaigns.
In: Economics
A perfectly competitive market ensures that a good will be sold for the price that it costs to produce. If the cost of production declines, so should the end price paid by consumers. Assuming you’re right about both the recent trajectory of shoe production technology and of the price of Converse shoes, they do go against that simple observation.
I would argue that only the market for athletic shoes *in general* is competitive, or close to it. You can absolutely buy no-brand shoes for close to what they cost to produce. However, once you start thinking about the price for a very specific good, like Converse shoes, things get more complicated. Converse is the only company that can make Converse shoes. They are a monopolist in that very specific market. Monopolists tend to restrict quantity and increase prices, as this is the best way to make a profit. That appears to be what Converse is doing.
This doesn’t matter if there are close substitutes for Converse shoes available. Converse isn’t a monopolist in Converse-esque shoes. However, Converse (like Coke) has something other companies desperately want, which is a sense among the public that their brand is unique and anyone making similar items is just a copycat. All the ads and the product placement and the famous people wearing the shoes are aimed at achieving that. This campaign was carried out between the time you remember when they were cheap and now, hence the increase in price.
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