Of all the ethical issues involved in producing, transporting, marketing, and selling food, pricing is one of the least-well explored. Issues of pricing are essentially absent from the academic literature on business ethics, for example, presumably because for “standard” products, and especially for commodities (like oil or coffee or wheat), businesses simply don’t face any decision about pricing. The market price is the market price, and there is little opportunity to deviate. And if there’s no choice to make at all, then there isn’t any ethical choice to make.

But still, people have pretty strong intuitions about prices, and in particular about what constitutes a fair price; but those intuitions aren’t always underpinned by a good understanding of the relevant businesses.

In that regard, it’s useful to read this interesting interview with the owner of what happens to be my favourite Manhattan bar, Ward III: From Behind the Bar: My Cocktail Costs How Much?. The interview doesn’t deal explicitly with ethics, but it does say a lot about the hidden operating costs that turn $1.95 worth of ingredients into perhaps a $12 cocktail.

Now, the pricing of cocktails isn’t exactly a burning social issue. Fancy cocktails at über-hip bars aren’t exactly necessities of life. But still, the basic economic lesson embodied in the above interview holds true for other foods and beverages. The lower limit of what a vendor needs to charge to stay in business is determined by a complex combination of overhead costs; and what they can charge is limited by the twin forces of competition and consumers’ willingness to pay.