Why are Vending Machines such a common sight in Tokyo?

If you were to walk around in Tokyo or any other major city in Japan you are likely to be struck by the extraordinary amount of vending machines. Vending machines selling everything from soup to flowers to CDs. This isn’t something we westerners are used to and is likely to strike us as somewhat odd. It is only natural to wonder why this is?. How come vending machines are so much more prevalent in Tokyo than in big Western cities like Berlin or Stockholm?

A friend of mine who is studying Japanese in Tokyo explained that this is typical of the anti-social culture in major Japanese cities. But being an economics student I couldn’t help to wonder if there isn’t an economic dimension to this question as well.

Economists love to think about the cost of things. One thing Japanese cities are famous for are their high costs of living. Their highly centralized population’s demand for housing is enormous, which is driving up the price of apartments. When the cost of living is high, workers will demand higher wages. High wages makes hiring more costly. Vending machines could be an easy way to get around paying expensive workers.

Of course its not only apartment prices that are high as a result of dense living conditions. Renting space for your business will also be expensive, even if it is just a small shop. Vending machines take up very little space and are usually placed outside on the sidewalk. That way they do not take up valuable business space. When rents are high these things matter.

Another thing Japan is famous for is the country’s unusually low level of immigration. It is almost impossible to become a Japanese citizen and it is very hard to get permission to stay and work. Combining this with an aging population and we have a shortage of cheap labor. The supply of cheap labor will affect wages. Wages eat into profits which makes vending machines look even more attractive.

Another result of Japans highly centralized population is that there will likely be a demand for a wide variety of products at all hours. Of course there is always a small part of the population who would like a cup of soup or a bouquet of flowers at 2 in the morning. But only when a large amount of people reside within a relatively small area will that demand be large enough to be worth serving. It's not much more expensive to have a vending machines turned on 24 hours a day then 12 hours a day, so that market made up of sleepless tokyoites is easy to service. In comparison hiring workers for the night shift will be expensive, not only is the costumer base smaller at night, workers are likely to be more expensive. Working retail at night is both uncomfortable and less safe then working days. Workers will likely demand to be compensated for this inconvenience. Demands you will not be hearing from vending machines.