By: Aaron Wang on February 22, 2026

Enter the Night Market—specifically the Taiwanese ones. The senses light up, with unique smells ranging from stinky tofu to sizzling duck assaulting your olfactory glands, and the constant maneuvering through colorful throngs of people, there is no time to rest. Somewhat surprisingly, these vibrant communities serve as sources of livelihood and economic activity. While the history of the night market is discussed in a previous article (see here), it is only proper to ask: how could such an economic engine seem so informal?

In July of 2025, Evan and I had the opportunity to travel to Taiwan to film the side of Taiwan that had been hidden by the constant deluge of great-power geopolitics. While there, we immersed ourselves in the many staples of Taiwanese life, but the experience of a night market stood out due to its dynamic and unpredictable nature that makes a night market a night market! From getting food poisoning to marveling at the colorful mochi on stands, or finding myself playing an arcade game right off the street and haggling with vendors, it was an overall amazing experience. 

Context

However, beneath this stitching of commodities and marketing is a booming tourism industry. Overall, Taiwan boasts around USD $10.028 billion in revenue and 8.5 million visitors (Travel and Tour World, 2026). Of these visitors, around 76.95% drop a visit to the night markets (Taiwan Today, 2014). Additionally, these night markets act as a source of employment for over half a million people (Li, 2022). As a rather significant force in the economy, how do these “informal” vendors work? 

Economics 

In fact, a night market’s economic logic closely follows the economic logic of a perfectly competitive market. Buyers and sellers/vendors (firms) broadly obey the general law of supply and demand, with a saturation of vendors often selling near-identical goods that allows for the satisfaction of demand (meaning no shortages, albeit excess is possible). Additionally, the sheer amount of near-identical goods (e.g. same jewelry, foods, games) means that there is little to no differentiability between firms and their products. More importantly, it also means, for the consumer, that alternatives are steps away. This environment of the nightmarket model ensures that firms are price-takers, meaning that individual vendors have little to no pricing power, as if firms sell above the market equilibrium (which is governed by the consensus of supply and demand), customers can easily find substitutes due to the lack of product and firm differentiability. Additionally, the highly elastic demand of these goods (i.e., small price increases decrease the sensitive demand), like small jewelry and foods, means that prices across night markets would be largely uniform. 

Of course, outliers exist, such as those with a cult-like following, good reputations, a famous recipe, or just access to a prime location, who have more pricing power. Furthermore, the perfectly competitive model isn’t universally applicable to night markets as prices can be sticky due to tradition or consumer expectation decoupled from market equilibrium (e.g., Costco’s USD $1.50 hot dogs), and other firms can artificially create pricing power through tourist traps. 

Nevertheless, the competitive nature of the night market is undeniable. With a relatively lower barrier to entry, as anyone could start a vending stall provided the appropriate permits and product idea, healthy competition is sustained to ensure that no single firm is able to accumulate outsized market power. So, if competition is perfect and so fierce, how may firms find an edge over the other? Could behind-the-scenes procurement and sourcing offer a competitive edge? Could techniques like vertical integration, exclusive partnerships based on loyalty or familial bonds, or collective purchasing help vendors gain an edge? 

During my trip, I visited the famous Raohe Street Night Market (饒河街觀光夜市) to pursue these questions. Raohe St. Night Market, while functioning in a similar fashion as a perfectly competitive market, boasts some firms/vendors that have brand reputation and differentiability, such as several Michelin-recognized stalls, including Chen Dong Pork Ribs Medical Herbs Soup (Tan, 2018). 

Supply Chains 

There, on the outskirts of the Raohe market, I met and talked to some vendors to understand how they sourced their products, why they sourced that way, and the motivations that kept them going. One memorable conversation I had (these conversations were casual and taken without notes) was with a small jewel vendor. While she could be considered an outlier based on her location on the outskirts, our conversation still offered a meaningful glimpse into night market supply chains. 

Her sourcing process was straightforward and in many ways mirrors the night market model as a whole. Middlemen and traditional “suppliers” were not utilized in the sourcing process, and there was no extensive or formal distribution network. Rather, she sourced much of her wares horizontally by scouting for materials or for jewelry to resell. Oftentimes, she would find materials or jewelry in her free time, as it was a pastime she genuinely enjoyed, and sometimes she would even make her own jewelry by combining base materials that she found in other markets. She found that, intuitively, sourcing things from other night markets posed few headaches as compared to establishing potentially complicated partnerships/networks/integration. 

This approach, indeed, reflects a broader pattern among (most) vendors as they lack the capital or scale to negotiate with manufacturers or secure deals via bulk purchases. But if products are often sourced from other night markets at presumably near equilibrium prices, how are vendors able to price things that ensure profitability while still respecting the elasticity of demand? 

In the case of the vendor I was talking to, she found an edge in presentation and value-creation. Regarding the former, some pieces of jewelry came with aesthetically designed cases, which introduced a meaningful layer of differentiation as compared to other jewelry vendors. Especially in a market where profit-margins are thin, and competition is fierce and in close proximity, this layer of differentiation allows critical flexibility. Regarding the latter—value creation—she was able to turn basic materials (e.g., plain beads, etc) into wearable jewelry through design and careful work, thus allowing for greater profitability. 

I ended up buying a bracelet and a ring for 1,500 NTD (~ USD $47). Having spoken with her at length, the purchase felt more valuable than the price could justify, as I had just caught a glimpse of how much work goes into each sale, and how demanding it can be to sustain a stall in such a competitive, high-traffic environment.

Raohe Night Market: What to eat at Taipei’s best night market. (2025, October 28). Taiwan Obsessed. https://www.taiwanobsessed.com/raohe-night-market-taipei/

Taiwan inbound tourism revenue hits US$12.3 billion. (2014, July 10). Taiwan Today. https://taiwantoday.tw/news.php?unit=18&post=20870

Taiwan surges in global tourism rankings. (2026, January 28). Travel and Tour World. https://www.travelandtourworld.com/news/article/taiwan-surges-in-global-tourism-rankings/

Tan, R. (2018, April 8). Where to eat at Taipei’s Raohe night market. MICHELIN Guide. https://guide.michelin.com/us/en/article/travel/where-to-eat-at-raohe-night-market-taipei