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Tortillas and Price Discrimination

I am from Texas, and I love price discrimination.


Um… what? Those seem like two very different things. But, to be honest, that’s what this blog is about.


Let’s start with what price discrimination is. When you last went to the movies, did you see an adult price and a senior/child price? Which one was more? Well the adult, of course. Is that unfair? Are you mad about that? Well no! It is just economics.


Most likely, adults are willing and able to pay more to go to the movies than children. Remember when we talked about wedding cakes and elasticity? It relates here. Children and seniors are more sensitive to movie ticket prices (more elastic) so the theater charges them less so that more people will go. To the adults who are less price sensitive (higher income being one reason), they can charge a slightly higher price without discouraging too many people from coming.


Here’s another example. And where our food comes in. You know those tortillas you buy at the grocery store? They are sometimes sold in the “international” section or under the “Mexican Food” sign, along with hard tortilla shells and taco seasoning for your ground beef. Do you know where else you can buy them? In the wrap section!


Wait, what? You’re telling me you haven’t seen tortillas next to the spinach wraps? That’s because they don’t call them tortillas. They call them wraps. You know, the spinach, roasted pepper, etc. wraps? And then they have plain wraps. Those plain wraps are actually the exact same as tortillas – same brand, same ingredients, same everything.


Don’t believe me? Let’s see.


Evidence 1: According to the Mission Tortilla US website, the difference is the size with wraps being larger. Well, then thing is you can buy a burrito size tortilla and it is as big as a wrap. According to the UK website they are the same thing.


US Website:



UK Website:



Evidence 2: The nutrition ingredients on the wraps actually say “tortilla.”


Evidence 3: Visual




Here is where the fun comes in. The wraps and the tortillas are different prices! They are the exact same thing minus the packaging… but they cost different amounts.


Now, here is the question. Which ones cost more? Let’s think about your two populations of people who buy these two items. Who makes tacos? Well me. But also families, large groups, couples looking for a quick meal. Who buys wraps? Typically those who are a little more health conscious: those who are making wraps rather than more carb-heavy sandwiches. On average, the wrap-buying population is likely a little less price sensitive to the tortilla-buying population. So… wraps cost more than tortillas.


One of the keys with price discrimination is that a firm can distinguish between markets. In our movie ticket example, you have to show your age on your id to get a senior ticket. The guy checking your ticket when you walk in will notice (if he/she is paying attention) if you are a 30-year-old walking in with a senior ticket. They can easily segment the market.

When it comes to wraps, how are they segmenting the market? By packaging it differently. They put “wrap” on the package rather than “tortilla.” People segment themselves.

It’s that simple. It’s that genius.


It looks like this came up in the blog world a few years ago (2012). Some people were quite outraged. I don’t find it outrageous. No one is forcing you to buy wraps versus tortillas. It’s a choice that you are making. Slate article. Blog one and two.


OK… there are probably cases where I wouldn’t like price discrimination when, for example, it borders on racial discrimination, but in the traditional sense I love it.


Remember, I also am from Texas. Growing up I went to Tex-Mex restaurants where there was a woman rolling out fresh tortillas to put on the grill as soon as you walked into the restaurant. I often preferred the tortilla to the beef or chicken you put in.


One day in college, I was going to make tacos and I didn’t have any tortillas from the store. I just had the ground beef and the taco seasoning. I did a quick google search for tortilla recipes. And wow. SO much better than store bought tortillas.


I’ve given you two different tortilla recipes below. One is dairy-free if that’s what you’re into. It is also my go-to recipe. The other creates a slightly fluffier tortilla if that is what you prefer. Both are not hard to make at all, and they don’t require any special equipment. You do want to make sure you have half an hour to let the dough rest. That allows them to roll out smoothly.


A special thanks to my supportive and fun and friendly colleague, Rich Patterson. I said I wanted to do a post on tortillas, and he gave me this idea he uses in class! Beautiful.


Flour Tortillas (1) from Epicurious


2 cups all-purpose flour

1/4 cup cold vegetable shortening, cut into pieces

1 teaspoon salt 

2/3 cup warm water. 

Directions:


Put flour in a medium size bowl. Just as you would a pie crust, cut the vegetable shortening into the flour either using two knives or a pastry blender.


Meanwhile, in a small bowl, add the water and 1 tsp of salt. Add to the flour ingredients, stir with a fork until blended. Then, using your hands (yes, using your hands), roll the dough into balls. Roll as many as tortillas you want to make. Obviously, the smaller the ball, the smaller the tortilla will be. I probably roll around 8.


Cover the bowl with plastic or a wet paper towel and let sit for 30 minutes. This is important.


After the 30 minutes or so, flour your counter. Then roll out, one by one, each tortilla until it is pretty thin, but not see-through or breaking. After you have rolled them out – or what I do – while I’m rolling them out, heat up a non-stick skillet. Put a little vegetable oil in it to get it going. Put your tortilla onto the skillet and cook for 1-2 minutes until toasted (it will bubble up on the other side, and when it does, flip!). Repeat on remaining side until done and do for the rest. Tortillas are best the day of. Even better within the hour while they are still warm.



Flour Tortillas (2) According to Epicurious this is “adapted from The Border Cookbook by Cheryl Alters Jamison and Bill Jamison”


Ingredients:

Two cups of all-purpose flour

1 1/2 teaspoons of baking powder

1 teaspoon of salt

2 teaspoons of vegetable oil or vegetable shortening

3/4 cups of warm milk


Directions: