Attention, People Buying Twinkies for $50 Online: The Twinkie Is Not Extinct

By Derek Thompson

Quick reminder: The difference between liquidation and extinction is like the difference between a fire sale and an actual fire

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There are two reasons why you should pay $50 for a box of Twinkies online. First: You are the world's only Twinkie addict and the 7-11 is closed. Second: You are a billionaire sitting on a pile of money you've resolved to donate by the most bizarrely random means possible.

Since those are low-probability motivations for buying a sponge cake, I'm guessing that many of the people bidding $50 for a box of Twinkies think the liquidation of Hostess will spell the End of Twinkies, in which a dwindling supply of the soft golden food-bricks will drive up their market price.

Nice try, but this confuses liquidation for extinction. Hostess is going out of business. That means it's selling its assets, not setting them on fire.

The Twinkie will almost certainly survive when some company buys it as a distressed price in the Hostess fire sale and continues to produce the awful little snacks. Among the leading contenders: Kellogg, Campbell Soup, and Grupo Bimbo -- the parent company of Sara Lee, and Entenmann's, and other snacks only somewhat less artery-stuffing than a Twinkie.

On the other hand, I suppose a behavioral economist could cheekily point out that, since price has been shown to change "experienced pleasantness" (i.e.: we have a tendency to report that food tastes better when it's more expensive), the poor sap who spends $50 on a box of creme-filled starch-manufacturing might report the most delicious-tasting Twinkie in the world.

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This article available online at:

http://www.theatlantic.com/business/archive/2012/11/attention-people-buying-twinkies-for-50-online-the-twinkie-is-not-extinct/265387/