There is a long-standing theory that discriminatory practices are eventually squeezed out of a market since they add marginal costs not carried by non-discriminatory firms. Becker’s model predicts that in a competitive setting, discriminating employers ultimately are forced out of the market by forfeiting profits. (See Becker, G. S. (1957) The Economics of Discrimination, Chicago: Chicago University Press). Of course, society should not wait for such a long-term market adjustment and most support anti-discrimination laws to end such practices. Yet, a controversial café in Melbourne Australia might have succumbed to such a marginal cost. Handsome Her, a vegan caf, became an international focus with its imposition of a “man tax” of 18 percent for any men who try to eat at the cafe. It was supposed to reflect the
gender pay gap.” That overt discrimination however appears to have created a customer gap and the cafe is now going out of business after only two years.
The cafe posted three rules:
“House Rules, Rule #1: women have priority seating. Rule #2: men will be charged an 18% premium to reflect the gender pay gap (2016) which is donated to a women’s service. Rule #3 respect goes both ways.”
Co-owner Alexandra O’Brien announced her closing and discussed their “brazen public discussions of structural inequality and oppression.” Many would call it brazen gender discrimination but all would call is a poor business model.