The factory created positive externalities (more customers) but also negative externalities (exhaust fumes and litter). Linh started a recycling program: customers who returned a clean bowl got a 2,000 VND discount. This internalized part of the litter externality. The city noticed and offered her a tax deduction for being the first "green pho" shop.
A new factory opened in the industrial park near Bình Dương, bringing 2,000 workers who commuted past Linh’s street. Demand for breakfast increased —the demand curve shifted right. Linh raised the price from 35,000 VND to 40,000 VND. At the higher price, she could justify the second pot (lower opportunity cost because revenue per bowl was higher). Quantity supplied increased to 110 bowls. Equilibrium moved. principles of economics asia-pacific edition
When a typhoon damaged the cinnamon crop in the Central Highlands, cinnamon prices tripled. Linh’s pho spice mix cost more. She worried: if she raised the price, would customers leave? She tested a 5,000 VND increase. Sales dropped only 2%. Demand was inelastic —workers needed quick, hot breakfast. She passed most of the cost to consumers. The city noticed and offered her a tax
The city announced a new street vendor license fee of 2 million VND per month, plus a ban on sidewalk seating during morning rush hour. That was price floor / non-price regulation in action. Many vendors closed. Linh saw an opportunity: she rented a tiny indoor space (10 m²) with two tables, legally registered, and added digital ordering via Zalo. The regulation raised her fixed costs, but because she was now formal, she could access a government small-business loan at 5% interest (below the market rate of 12%—a form of subsidy ). The deadweight loss from the regulation was the closure of traditional carts, but Linh survived. Linh raised the price from 35,000 VND to 40,000 VND
A year later, Linh opened a second shop near the new metro line (a government infrastructure project financed by ADB loans). She hired four workers. Their wages contributed to Vietnam’s GDP via consumption and investment. When a journalist asked how she succeeded, Linh pulled out her dog-eared copy of Economics: Asia-Pacific Edition and said: "My grandmother taught me pho. This book taught me to see the invisible hand."
Linh grew up in District 3, Ho Chi Minh City, helping her grandmother sell pho from a street cart. Her grandmother, Bà Tám, made the same 80 bowls daily—no more, no less. "It’s tradition," she said.