Another way to screen job candidates

Jokes? Click here.

Boeing plays tough

This article from Reuters is an account of Boeing's reaction when union leaders reject Boeing's offer of a contract that would have eliminated pensions; Boeing announced that it is drawing up a short list of possible locations in which to build the 777x. The article illustrates bargaining and game theory. The short list raises the disagreement outcome for Boeing and reduces the disagreement outcome for the union. The short list also could be viewed as a threat or signal in sequential game.

Tax rates over the last 10 years

This posting is a good description of statistics about the effective average federal tax and transfer payment rates for various income classes since 2001. It would be a good introduction to a discussion on vertical equity. 

A positive review of "modest" increases in the minimum wage

This opinion from the NYT supports Obama's proposal to increase the minimum wage. It states that the evidence shows that the impact of modest increases in the minimum wage is insignificant and describes recent studies that provide a series of possible explanations. 

I wish that the effect was not limited to modest increases in the minimum wage. I wonder if, given the variations in employment driven by technological change, the business cycle, and demographics, statistical tests may not be able to identify the small change in employment that a modest increase in the minimum wage might cause. 

The evidence claiming that the minimum wage reduces employment opportunities suffers flaws as well. Opponents of minimum wage legislation often cite the high rates of unemployment of young people and African-Americans and the increase in these rates relative to our history before minimum wages. Perhaps other factors explain these rates and their increase.

PPACA v. markets

This article in the NYT describes why some professional living in New York will have to pay more under PPACA than they do when left to their own devices and free market exchanges. They have formed associations and purchased health insurance through the associations rather than as individuals. PPACA forces them to enroll as individuals. On the plus side, they will be able to children on their policies longer, face no consequences if they have or develop preexisting conditions, and not worry about how much insurance companies have paid in benefits over their lifetimes.  

The article is a good example of the effects of asymmetric information and a potential solution to it, the ingenuity of individuals and how they respond to incentives, and an unintended consequence of public policy.

Coke's experiment with vertical integration

Here is an article that I use when talking about vertical integration being motivated by a combination of relationship-specific investments and contracting costs. However, maybe the example was not good. Here is an update.

Pricing at Amazon

This article from the WSJ is a good introduction to pricing, the trade-off between volume and margins, and price discrimination on the Internet.

Do stores benefit from having sales on Thanksgiving?

This article from the WSJ describes the recent trend for stores to get a jump on Black Friday by starting sales on Thanksgiving. It is a good introduction to price discrimination, tie in sales, and cannibalization. It is also an example of a prisoner's dilemma that may reduce welfare.. 

SUMMARY: A trip with two shoppers in Albany shows that big chains like Wal-Mart are risking their customers' good will and cannibalizing later sales by pushing their "Black Friday" deals so aggressively into Thursday. "The moves are carefully calculated to help chains get ahead of online competitors that have successfully stolen a march on sales in the past couple of years, as well as outflank brick and mortar rivals in what has become essentially a zero-sum game for sales growth amid the sluggish economy."

CLASSROOM APPLICATION: The article offers an interesting twist on the models typically taught in principles and intermediate microeconomics. The article has elements of dynamic sales, timing in oligopolistic competition, and consumer preferences for purchase timing. The point in the article about cannibalization recognizes that BlackFriday demand is an economic substitute of Thanksgiving Day sales. Hence, if consumers purchase a product on Thanksgiving Day, they do not purchase it on Black Friday. With regard to retailers choosing whether to open on Thanksgiving Day, an interesting issue is whether competition drives them to do so. If consumers prefer not to leave their homes on Thanksgiving Day and retailers are not selling on the day to second-degree price discriminate (by offering a price-time menu), then the oligopolistic competition is driving retailers sell on a day that reduces consumer welfare.

QUESTIONS: 
1. (Introductory) Do consumers prefer to begin their Thanksgiving weekend shopping on Thanksgiving evening? Alternatively, would they prefer to begin the long-weekend shopping on Black Friday morning?

2. (Advanced) What factors pushed some retailers to move their Black Friday sales to Thanksgiving evening? Discuss competition from Internet retailers, competition among brick-and-mortar retailers, and the fact that Christmas is less than four weeks from Thanksgiving.

3. (Advanced) What is second-degree price discrimination? Are Thanksgiving evening and Black Friday early-morning sales a form of second-degree price discrimination in which to get the best prices consumers must fight the crowds and shop at unpleasant times?

Should fast lanes be free?

This article from the WSJ describes the move to impose a charge on drivers to use fast lanes. It is a good introduction to how to use price to address congestion and negative externalizes.

SUMMARY: Rush-hour drivers in congested U.S. cities are increasingly facing a stark choice: stay stuck in traffic or pay to get in the fast lane.

CLASSROOM APPLICATION: Driving on congested highways creates a negative externality; and pricing highway travel according to the amount of congestion improves economic efficiency. Instructors can create a simple scenario of a two-lane highway in which one lane has a fee and the other does not. Using this simple scenario, instructors can make students begin to consider the following issues about fast-lane pricing: the decision about which lane to travel depends in part on opportunity cost of time; sorting by travel time according to opportunity cost of time improves economic efficiency; and the price that maximizes state revenues from fast-lane pricing may not be the efficient price.

QUESTIONS: 
1. (Introductory) Does driving on a congested highway create a negative externality?

2. (Advanced) Suppose that adding a new driver to a fast lane reduces the wellbeing of drivers currently in the lane by $8, while deleting a driver from a substantially congested lane increases the wellbeing of drivers currently in this lane by $10. The greatest utility increase of any of the drivers currently in the congested lane from moving to the fast lane is $3. What is the greatest price a highway administration could charge for fast-lane driving that motivate any driver to shift from the slow lane to the fast lane? If those currently in the fast lane could veto any lane shift, what is the smallest payment they would accept for a shift into their lane? For an efficient lane shift, would those currently in the slow lane need to subsidize a lane shift?

3. (Advanced) Does fast-lane pricing improve economic efficiency? As the slow lane becomes more congested, should the price of the traveling in the fast lane increase?

4. (Introductory) Why are some drivers objecting to fast-lane pricing? Does the introduction of fast-lane pricing harm those who continue to drive in the slow lanes?

The wedding fix

This article describes the wedding industry and points out that it thrives on asymmetric information and price discrimination. Here is a posting on the author's blog with more analysis.

Obama wants to raise the minimum wage

This article describes Obama's support for an increase in the minimum wage to about $10. 

Want evidence that the rule of law promotes economic prosperity?

Compare this list of most corrupt nations with the standards of living there.

Is the typical economics curriculum ideal?

This article and the folks at the Institute for New Economic Thinking say "No" and offer alternatives.

What happens when the government tries to help dairy farmers?

This article from CNNMoney describes the effects of letting the farm bill expire. The current bill sets a support price for dairy products at a level about 1/2 of the current price. If the bill expires, the support reverts to a 1949 standard that would set the support price at about twice the current price. Click here to read about the 1949 standard.

The articles would be good introductions to binding and non-binding price floors.

School Choice

Here is an account of New Orleans's use of school choice. The initial results look good.

PPACA = Patient Protection and Affordability Act, aka ACA and Obamacare

The Kahn Academy has a good summary.

Click here for the summary provided by the White House.

Click here for a thoughtful piece in the WSJ that discusses the fundamental nature of the bill.

This article in CNBC describes some of the reactions by business to Obamacare. The rational actor paradigm predicts all of them: incentives matter.

Visit the posts labelled Health Care for more.

The air up there

This story form Marketplace is a great example of externalities and how clearly defined property rights leads to mutually beneficial trades. (The audio is way more fun than the transcript.) Coase would be proud. It also mentions how restrictions on trade affect bargaining positions and market outcomes.

For an example of how markets for air rights may have failed, click here. 

The two stories might be fodder for a class discussion about why the market for air rights might be "good" when the two parties are developers or landowners, and "bad" when one party is Central Park. 

Controlled field experiments

My inspiration du jour is controlled field experiments. To learn more, read The Why Axis or visit this TED talk by Esther Duflo.

Business responds to PPACA

This article in CNBC describes some of the reactions by business to Obamacare. The rational actor paradigm predicts all of them: incentives matter.

Make a stand

Here is an article that addresses cause-based marketing and philanthropy, a research interest of mine.

ObamaCare = PPACA

Here is a video that portrays PPACA unfavorably. It is hyperbolic and contains grains of truth. To read the 906-page bill, click here.

Here is another critical and comical portrayal of PPACA.

Having trouble finding a job?

You might learn something from this article. I wonder what the best response is by colleges and universities.

Game theory, parenting, and birth-order effects

This article for PBS Newshour is an interesting account of the linkages between birth order, parenting, and subsequent outcomes for children. The gist is that parents are "harder" on first children in order to establish a reputation and send signals to younger children and that first children are (therefore?) more likely to avoid bad behaviors (substance abuse) and accumulate wealth. 

Is it a good day for low wage workers?

This article in CNN starts by announcing that increases in the minimum wage passed by two localities is a good day for low wage workers.It might make a great natural experiment to determine the effect of increasing the minimum wage. All we need is a control locality that is otherwise similar and has not increased its minimum wage.

How do you know when a politician is lying?

Here is a CNN story on a difference between what Obama promised when promoting passage of the ACA and what he said recently. I particularly like the bite where Obama says, "We will keep this promise."  Here is the video released by the Obama folks which they said is a 4-minute summary of the plan. Note the first point.

I am not confident that what he said recently is accurate. My understanding is that individuals will lose plans that do not meet the standards specified in the ACA even if the plans have not changed since the passage of the bill. Here is a story about cancellations.

FYI: When his or her lips are moving.

Teaching econ to MBA students

Here is a nice post discussing economics, MBA students, and Schools of Business.

Apple's dual iPhone strategy in doubt?

The WSJ ran a story which suggested that Apples decision to introduce the iPhone 5c. It is a good introduction to the problems firms face when offering multiple versions of a product. 

FYI: Apple thinks that the story is inaccurate and based on conjecture rather than fact.

Here is a summary and questions.

SUMMARY: Apple hoped to broaden its appeal with a cheaper version of the iPhone. But that effort appears to be faltering after a few weeks.

CLASSROOM APPLICATION: Students can evaluate Apple's strategy of second-degree price discrimination, in which the company is offering a price-quality menu. Two interesting issues are whether Apple mispriced the two phones or set too small of a quality difference between the phones.

QUESTIONS:
1. (Introductory) Why are the sales of the iPhone 5S doing well while the sales of the iPhone 5C are not? Discuss the quality and price differences of the two phones?

2. (Advanced) Evaluate the statement: "The reduced orders could indicate weak demand, or could signal that Apple wanted to ensure adequate supply of the 5C so that potential buyers, who were more likely to be switching from competing phones, didn't have to walk out of a store empty-handed." Is empty-handedness is the driving force of the greater inventories of the 5C? If so, would Apple have done better by producing more 5S models and fewer 5C models?

3. (Advanced) What is second-degree price discrimination? By offering both the 5C and 5S models, is Apple practicing second-degree price discrimination?

4. (Advanced) When introducing the 5C, should Apple have changed the price of the 5S?

Capitalsm and growth

This account states that a recent UN report links economic growth with free markets.

Two cheers for sweatshops

This account describes the advantages of sweatshops in less-developed countries.

College major and earnings

Here is a story from NPR on the most and least lucrative college majors. Here is the full report from 2009 which prompted the story. Notice that Business Economics has the highest median earnings for Business and Economics has the highest median earnings for Social Sciences. The story points out that employees consider a number of factors when choosing a major or job besides salary - salary matters but salary is not all that matters.

Colleges Try Cutting Tuition

This article might be a good way to talk about price discrimination, game theory, strategy, and behavioral economics. It discusses the recent decisions by some colleges to reduce simultaneously nominal tuition rates and financial aid offers. Doing so may leave the net tuition equal for many families. The hope is that the simpler process will attract more and better students. The article points out that families may not respond rationally to lower net prices.

How Obamacare wrecks the work ethic

Here is an opinion that is critical of the impact on marginal effective tax rates of implementing Obamacare. It mentions the impact on labor market decisions and the possible impact on the macro-economy.

Maine to Allow Prescription-Drug Imports

Here is an article I might use to introduce price discrimination. It is an account of a new law in Maine that allows for the re-importation of drugs produced in the US. It mentions the effect on prices and quality control.

What makes an instructor good?

This essay from WSJ argues that instructors who follow eight principles help students achieve.

1. A little pain is good for you.
2. Drill, baby, drill.
3. Failure is an option.
4. Strict is better than nice.
5. Creativity can be learned.
6. Grit trumps talent.
7. Praise makes you weak...
8. ...while stress makes you strong.

This article points out that the incentives at a growing number of colleges may induce instructors from following these principles. An implication is that student evaluations should not be viewed in isolation from the grades students earn in the course.

Here is another opinion that relying on evaluations does not promote learning and does promote higher GPAs.

Here and here and here is a two-part post on what evaluations measure.

Health Insurers Scramble to Keep Healthy Customers

This article from the WSJ describes how insurers are "informing" their customers as the rollout of the health exchanges approaches.

One money quote is, "In most states, carriers are tailoring their messages based on the age and potential subsidy eligibility of their policyholders. Letters to younger, healthier members play up expected rate increases to discourage them from shopping on the exchanges. But in some cases insurers say they are encouraging older people to look at their options on the exchanges, where they might find lower rates."

Why would insurers discourage younger, healthier members from shopping on the exchanges while encouraging older people to do so?

Who can anticipate lower premiums on average under the ACA than before: young people, healthy people, old people, sick people, people with bare bones coverage before ACA? Which of the groups listed above can anticipate higher premiums?

Click here for a related post.

Cotton wars

This Planet Money story tells why the US pays cotton farmers in Brazil. Here is a condensed version.

Ronald Coase

This opinion is a wonderful tribute to Ronald Coase. It is a nice introduction to the role of government, the theory of the firm, transactions costs, and the Coase Theorem. 

Non-price advertising for Diet Pepsi Max

Here is a cute ad that I might use when talking about some ads attempt to differentiate the product and increase demand by touting benefits.

Personalized pitches

This article from Business Week describes how firms attempt to use technology to achieve 1st degree price discrimination.

How deep are your pockets?

This article from the Economist is a nice description of how firms are gathering information in attempts to practice 1st and 3rd degree price discrimination.

High court dives into resale trade

This article from the WSJ describes an example of a firm attempting to prevent artibrage in order to maintain 3rd degree price discrimination.

Why college costs so much

In this interview Richard Vedder discusses what he sees as the reason that the cost of college has increased so much - government subsidies. Who can't like an explanation  that includes a reference to moral hazard?

What would Coase do?

Here is an excerpt from a story Real Sports recently ran about Donald Trump's lawsuit against Scotland. He wants to block the construction of windmills in the North Sea just off the coast of a golf resort he is building. He worries that the windmills will ruin the view from the course he has already build, and from the luxury homes and hotel he plans to build.

The ruling may hinge on who owns the property rights to the view. To explore the Coase Theory, an instructor could ask students what market transactions would be mutually beneficial in each case if transactions costs are low.  

An interesting sidebar is that the residents near the golf course initially opposed Trump's plans because the course would destroy the pristine beauty of the area.

Perverse effects

This article from the WSJ shows that government policies often have unintended consequences and that predicting the effect of a policy is difficult and may be impossible for a set of policies.

Open all night

This article from the WSJ is a nice example showing why short-run marginal cost increases with output. It also is a good introduction for a discussion of what the firm considers when choosing its scale and the trade-off between reducing short-run marginal cost and risk.

Will young healthy adults be willing to subsidize old sick adults?

This article from the WSJ points out that a key to the success of the ACA is for young, healthy adults to purchase health insurance, thereby subsidizing older, sicker adults.

Can the government do anything well?

John Stossel says no in this article. I suspect he recognizes that the government does some things well but thinks that it has entered too many areas that it does badly, at least relative to free markets. He does present an alternative - free markets - and does a nice job describing their benefits for both economic activity and liberty.

Is solar power efficient?

This article says NO!

Do Manufacturers Need Special Treatment

This opinion by Christina Romer discussed the economic case for singling out manufacturing for special tax breaks or direct government investment. She finds that none of the arguments are convincing.

Friedman on Limited Government

Here is a good video in which Milton Friedman describes his ideal society.

Judge rules that Apple conspired to increase price

This case is a good way to introduce collusion, most favored nations clauses, and pricing related products.

Venezuela's Cheap Gas

This article from the WSJ describes some of the effects of subsidizing gasoline in Venezuela.An interesting point is that folks there use 7 times as much gasoline as neighbors in Columbia.

If the article fails to load, do a Google search for the title.

Evolution and Game Theory

This article in the WSJ reports a study looking at the genetic determinants of our behavior in games where the alternatives are to cooperate or to defect. 

Debate between Evans and Lacker

The Virginia Commonwealth University's School of Business hosted a discussion between two Presidents of Federal Reserve Banks, Jeff Lacker from Richmond and Charlie Evans from Chicago. They represent the two extremes of the positions taken by members of the Federal Open Market Committee. Lacker argues for monetary restraint while Evans thinks the Fed should attack high unemployment like "our hair was on fire."

A video, with a link to the slides used by Evans.

The press release from the Richmond Federal Reserve Bank, with video and slides.

The Washington Post – story includes link to our School of Business website 

http://www.washingtonpost.com/business/economy/fed-officials-debate-stimulus-inflation-policies/2013/04/02/545d3e62-9c05-11e2-9a79-eb5280c81c63_story.html

The Wall Street Journal – mentions Virginia Commonwealth University 
http://blogs.wsj.com/economics/2013/04/02/hawk-vs-dove-fed-officials-face-off/

The New York Times – mentions Virginia Commonwealth University 
http://www.nytimes.com/2013/04/03/business/a-debate-in-the-open-on-the-fed.html?_r=0

Reuters – syndicated worldwide, mentions Virginia Commonwealth University 
http://www.reuters.com/article/2013/04/03/us-usa-fed-lacker-evans-idUSBRE93201120130403

Bloomberg – mentions Virginia Commonwealth University
http://www.bloomberg.com/news/2013-04-03/fed-lacker-evans-clash-pits-japan-specter-against-70s-inflation.html

Richmond Times-Dispatch – VCU School of Business Foundation in headline 
http://www.timesdispatch.com/business/economy/federal-reserve-presidents-differ-on-monetary-policy/article_c941f754-6f59-54e4-9250-d7fbed9684d3.html

MNI Deutsche Borse Group – mentions Virginia Commonwealth University Business School 
https://mninews.marketnews.com/index.php/feds-lacker-evans-square-debate-over-mon-pol-risks?q=content/feds-lacker-evans-square-debate-over-mon-pol-risks

From the Mouth of the Horse

This clip is a good summary of Obama's position on the ACA.

What is Health Insurance

This opinion does a nice job describing the difference between catastrophic health insurance and pre-paid medical payments and argues that Sebilious does not understand the difference. The writer does a nice job illustrating the moral hazard associated with pre-paid medical payments. 

An Econ Major Has a Good Job Interview

NPR recently ran this story on the disconnect between employees they want to hire and graduates from colleges and universities. Part of the story is an interview between a employer and a student a VCU who is a double major in computer science and economics. 

I endorse this message

Einstein on cluttered desks.

Android

This article from Time has some useful background information about Android. It could be a good introduction to tipping, network effects, and complementors.

Yahoo! Again

This article in the New Yorker is a good introduction to the potential benefits of face-to-face interactions with coworkers and the disadvantages of tele-commuting.

For a contrary view, read this article from CNN.

Economists Crunch Data Well

This article in the WSJ is a good reason to study economics. For example, the MA program where I teach offers a three-course sequence in econometrics. 

A Tale of Two Pricing Algorithms

This post tells the tale of what can happen when two pricing bots compete.

Macro Follies

Here is a cute video on macroeconomics.

Yahoo!

Here is the most cogent discussion of Yahoo's recent decision to ban tele-working. It could be an excellent way to initiate discussion over innovation, team work and team building, corporate culture, monitoring, and even why we require students to congregate together in classrooms.

More on ABI's full acquisition of Modelo

This NYT article is a good introduction to mergers, pricing substitute products, and game theory. Who doesn't love a NYT article that mentions trigger strategies? 

Invisible Hand

Air fares as content

Read this article, this article, and this article to learn about a battle between American Airlines and Orbitz over how customers will order tickets, who pays whom for access to information on fares, and who owns the data about the consumers.

Unions and Minimum Wage

This article in the WSJ identifies two reasons that unions support increases in the minimum wage.

1. The wage paid in many union contracts is pegged to the minimum wage. As the minimum wage rises, so dos the union wage.
2. Paying less skilled workers more increases the demand for highly skilled unionized labor.

Cute Ad that Stresses Low Price

Here is a video that I might use to introduce the relationship between advertising and pricing. It is cute and may make demand for elastic because if stresses low prices.

Harkin on Minimum Wage

In this editorial from USA Today, Sen. Tom Harkin argues that the Federal government should increase the minimum wage to something higher than $9 per hour, the current proposal. Here are some quotes two paragraphs near the end of the editorial.

• Raising the minimum wage is one of the simplest and most effective ways to help working families succeed.
• Contrary to publicized myths, research proves that increasing the minimum wage will not cost us jobs; in fact, our proposal would create at least 100,000 jobs through increased consumer spending.

An argument against a higher minimum wage is doomed to failure if his statements are correct. According to Harkin, a higher minimum wage helps "working families succeed" and creates jobs. His statements lead me to wonder whether he would support raising the minimum wage to $100 or $1,000; why not really help working families and create many more jobs?

Minimum Wage

This opinion from Forbes is a nice discussion of the drawbacks to increasing the minimum wage. Some highlights:

• "as the price of labor (the wage rate) increases, the number of jobs will decrease, other things constant. Moreover, the decrease in employment will be greater in the long run than in the short run, as employers shift to labor-saving methods of production."
• President Obama believes that increasing the minimum wage from $7.25 to $9 "'would raise the incomes of millions of working families.' If so, why not increase the federal minimum to $100 an hour and abolish poverty?"
• "The way to create jobs and increase one’s real wage rate is not to increase the minimum wage, but to increase one’s productivity."
• "The minimum wage is popular with many voters who want to express their sympathy for the poor and who don’t recognize the unintended consequences of 'living wage' laws. Unions also support the minimum wage but out of self-interest. A hike in the legal minimum wage helps protect union jobs by reducing competition from lower-skilled workers."

Hal Varian Answers Questions

Here is a transcript of questions for and answers from Hal Varian, Chief Economist @ Google. Read it if you enjoy reading how smart people think and write. It is also a plug for learning econometrics. 

Incentives to Attract Business

This article from the WSJ presents evidence that incentives offered by states to attract new businesses may be bad investments. It can be a good introduction to prisoner's dilemma, rent seeking, and public finance.

A Brief History of CarMax

This article in WorkingWorld is a good short history of CarMax. It provides insight into its strategy - what it did to make itself unique to serve better its target audience.

5 Easy Pieces

This scene from 5 Easy Pieces is a good introduction to bundling.

Energy Markets

PJM coordinates day-ahead and real time electricity markets. It is a great example of real-time auctions and future markets.

Good to Great

This article from Wikipedia is a nice summary of Jim Collins's book, Good to Great. The links at the end of the article have nice critiques and show that many of the firms Collins identified as great in 2001 have fallen on hard times. It makes a nice introduction to a discussion of strategy and the difficulty of sustaining high rates of return.

Nascar Strategy

Here is a humorous clip from the Onion Sports Network discussing strategy in NASCAR.

DOJ Blocking Beer Merger

The article in Fiscal Times describes the DOJ's attempt to prevent Anheuser-Busch InBev from acquiring complete control over Modello. A nice description of implicit collusion and price leadership follow.

How to Fix Mircosoft

This article from CNN is a good way to prompt discussion about strategy.

Pricing Apple Products

The article in the WSJ is a good introduction to pricing, margins, elasticity, and related goods. Apples profits are flat despite selling more phones and the evidence indicates that different versions of the iPhone are substitutes but some iPhones and iPads are complements. 

Conscious Capitalism

This review of a new book by the CEO of Whole Foods is a good introduction to the a discussion of the proper goal for a firm. It could also spark discussion about firm architecture and Hayak's views.

The Logic of Collective Action

This opinion in the Washington Post is a good introduction to what Mancur Olsen said about collective action and interest groups. President Obama's use of the phrase, collective action, prompted the opinion.

Regulations and Rent Seeking

CNNMoney posted this article. It is a nice list of regulations that prevent entry and competition. It could be a nice way to introduce a discussion of the government's role in regulating market inefficiencies and the danger that government regulation becomes rent seeking. The example about taxicabs could also spur discussion about the entry and exit decisions and what determines the price of medallions.

Econ on Demand

Click here to see some good video clips discussing a variety of topics in economics 

Costs

Here is a nice video from the Kahn Academy on short-run costs.

Pricing iPhones

This article in the WSJ is a nice example of the difficulties pricing different versions of a product. 

Ice Cream Wars

Clip here for an NPR story on Ice Cream Trucks in Chicago. It touches on vertical relationships, rent seeking, incremental analysis, and collusion.

H&M on Vertical Integration

Click here for a video in which H&M describes its vertical integration.

Split or Steal

Here are three clips from Split or Steal. They make great introductions to game theory.

• Clip 1
• Clip 2
• Clip 3

Hudsucker Proxy

This clip features Hula Hoops and is a great introduction to pricing and supply and demand.
This longer clip also introduces organizational architecture and decision rights. 

Sowell on Minimum Wages

Click here to read Thomas Sowell's critique of minimum wage legislation; he argues that it creates unemployment among the most disadvantaged people in the labor force. For a similar critique, click here to see a part of an interview with Milton Friedman.

400 years of health and standards of living

Click here for a great video showing 400 years of data for health and GDP per capita for 200 countries. It shows the link between health outcomes and GDP, that outcomes improve at different times in different areas and countries, and that war and epidemics can have big effects. It makes a great introduction to talk about economic development and the role of institutions and good government.

An analysis of a tax on carbon

This article discusses the limitations of using a carbon tax to address global warming. I like its discussion of externalities and the Coase theorem. It also recognizes that either cap and trade or a carbon tax can reduce carbon emissions. However, some of the analysis is fuzzy or confusing.

The author claims that "Most economists prefer a revenue-neutral carbon tax that would be imposed at the mine-head for coal, the wellhead for natural gas, and at the refinery-gate for petroleum products." I don't know the preference of most economists, but I would prefer imposing the tax on the producers who emit it if unless monitoring costs are prohibitive  Why make a utility company that sequesters carbon dioxide pay as much for coal as one that burns "dirty"?

Roll with the Flow

This video is cute and a good introduction to political economy. Who doesn't like a video where Hayek is a hero? The video also mentions Keynes and Bastiat. Some topics mentioned are: measurement of economic activity, invisible effects, opportunity cost. and the subjective nature of value. 

Teaching IBM new tricks

This article can stimulate classroom discussion on strategy.

Ford's Response to Higher Fuel Mileage Requirements

This article in the WSJ describes how Ford is preparing to meet the new Federal mandates for fuel efficiency. It can be used to stimulate classroom discussion about strategy, costs, production, political economy, and supply and demand.

Strategy

1. This site is an account of Buffet's perspective on competitive advantage.
2. This link is Investopedia's definition of an economic moat.
3. In this interview Warren Buffet discusses investing, moats, and sustainable advantages.
4. Here Warren Buffet describes moats and castles.

Porter on Strategy

This clip is my favorite introduction to / summary of strategy.

Instructional Video on Pricing

Click here to see an instructional video I might use to introduce complex pricing. I like that it points out that pricing of one good depends on its relationship to another good. I also like that it points out that the identification of the optimal price is difficult. I dislike that it fails to mention quantitative analysis of demand or elasticity and the final conclusions are vague. The mattress test looks like a great basis for an advertising or marketing campaign or a direct sales pitch; its ability to set price seems to be limited because it ignores that substitutes for your product may exist..

Even Kids Resent Price Discrimination

Click here to see a commercial by Ally Bank.

What can we learn about pricing from Lucy Ricardo?

Click here to view a clip from I Love Lucy on how (not) to set price. It is a good introduction for Bertrand pricing in an undifferentiated duopoly, strategy, whether a marginal sale is profitable, and the shut-down decision.

My Life as an Instructor

Click here to see Rodney Dangerfield's first class in economics.

Apple Cuts Back Orders from Suppliers

This article in the WSJ describes how the slowdown in orders for iPhones is affecting Apple's suppliers. It shows nicely that the demand for inputs are derived from the demand for the final good. It also notes a problem for suppliers selling parts that are customized for Apple.

Detroit Responds to Fuel Mileage Mandates

This article in the WSJ describes what the automobile manufacturers are doing to meet the new Federal mandates for fuel mileage and the possible effects on the market for automobiles. It provides a good case study of cost-benefit analysis, the role of government, and externalities.

Wal-Mart Enters India

This article in the WSJ describes well the disadvantages of bad infrastructure and government regulation.

Resale, Trade, and Arbitrage

This article in the WSJ describes the artirage opportunities available when companies sell goods at lower prices overseas than they in the US market. The Supreme Court is hearing a case about the legality of resale back here in the US. Guess which side manufacturers support.

Benefits of Price Gouging

This article in the WSJ discusses the advantages of higher prices during emergencies.

How much ... ?

Patti Page's song.

Internet Access in Hotels

This article from Slate describes well the choice hotels face when deciding whether to include "free" Internet access with their rooms or to require an additional payment from their guests.

Online Price Discrimination

This article in The Economist is a nice discussion of how companies can use the Internet to gather information and to use the information to discriminate in price.

Price Discrimination on the Internet

This classic news item describes an instance when Amazon charged IE users different prices than shoppers who used Netscape. The instance illustrates well how web sites can customize a visitor's experience and the opportunities it provides to discriminate in price.

Before reading the item take this quiz: Who saw the lower price, IE users or Netscape users?

Price Discrimination or Steering Customers to What They Want?

This article from the WSJ describes how Orbitz "is experimenting with showing different hotel offers to Mac and PC visitors". This experiment be viewed as an attempt to discriminate in price or as an attempt to help customers find what they want more easily. The experiment also illustrates how web sites and offers can be customized. 

Before reading the article, take a quick quiz:  Who saw more expensive hotels earlier in the list from Orbitz, PC or Mac users?

Web sites discriminate

This article in the WSJ describes how Staples uses estimated distance from a brick and mortar store and possibly estimated income and other factors to vary the price displayed on its online store.