Keep it simple

This post from BBC outlines the three key ingredients for a successful merger and four ways to organize a company.

Supply and demand in action

The article in Reuters reports that reducing the penalty for adultery affects the market for condoms.

Why don't luxury hotels provide "free" Internet?

The Middle Seat. Pay for Wi-Fi? Only at a Luxury Hotel
by: Scott McCartney
Feb 19, 2015
Click here to view the full article on WSJ.com
Click here to view the video on WSJ.com 

TOPICS: Pricing

SUMMARY: High-end hotels are fighting hard to be the last place left on Earth where you have to pay for wireless Internet connections.

CLASSROOM APPLICATION: Students can analyze the reason why high-end hotels charge for Wi-Fi connections while lower-end hotels do not. The article draws the analogy between these hotel Wi-Fi charges and airline baggage fees. The related video states, "For the hotels, it lets them advertise a lower rate and then hit you with the upcharge when you get there." The most interesting point in the article for students to analyze: "Wi-Fi has become the most prevalent hotel upcharge, slapped onto bills where business travelers know their companies will pay and affluent leisure travelers are less price sensitive.... They charge at premium properties but not at budget inns because price-sensitive chains have made free Wi-Fi a perk to attract customers, and all want to stay competitive."

QUESTIONS: 
1. (Advanced) What is the relationship between the price elasticity of demand for a hotel and whether it charges for Wi-Fi?

2. (Advanced) Why are businesses willing to pay Wi-Fi upcharges while price-sensitive pleasure travelers are not?

3. (Advanced) What is "add-on pricing"? Is an add-on price posted like a hotel rate is posted? Is Wi-Fi upcharge an example of add-on pricing?

4. (Introductory) Is free Wi-Fi at high-end hotels an effective loyalty inducement?

Supply and demand in action

This post connects lower fuel prices to growth in airline travel.

Price ceiling for Uber?

This post examines the link between surge pricing and the ability to obtain transportation during states of emergency. It could be good way to start a class on the impact of price ceilings.

Supply and Demand in Action

This post describes what happens when lower interest rates increase the demand for housing.

Supply and demand in action

This post describes what happens when consumers shift from buying houses to renting apartments.

CBO's recent analysis of the proposal to increase the minimum wage

The CBO estimates that the impact of raising the minimum wage to $10.10 on employment ranges from a slight decrease to a loss of 1 million jobs. The best estimate is implementation would reduce employment by 500,000 (and increase the unemployment rate by about 0.3%).

"Many more low-wage workers would see an increase in their earnings. ... The increased earnings for low-wage workers resulting from the higher minimum wage would total $31 billion, by CBO's estimate. However, those earnings would not go only to low-income families, because many low-wage workers are not members of low-income families. Just 19 percent of the $31 billion would accrue to families with earnings below the poverty threshold, whereas 29 percent would accrue to families earning more than three times the poverty threshold, CBO estimates."

A reason to ban computers in the classroom?

This post on the Marginal Revolution blog and this report from Boston.com say that students learn better when they take notes by hand than when they take them with a computer. The post has a links to a report on the study by VOX and the original study.

What good are economists?

This opinion says economists have created tremendous value and wealth for the economy.

Mixed strategies at the Big Game

This opinion does a nice job describing mixed strategy equilibrium and suggests that Pete Carrol's decision to pass with 26 seconds to play in the recent Big Game may have been the result of an optimal mixed strategy.

Net neutrality is the new black

FCC to Propose Strong 'Net Neutrality' Rules
by: Gautham Nagesh
Feb 03, 2015
Click here to view the full article on WSJ.com
TOPICS: Internet, Regulation
SUMMARY: FCC Chairman Tom Wheeler wants to expand his agency's authority over broadband providers, regulating them tightly like telecommunications firms and fully embracing the principle known as "net neutrality." Related Article 1: Obama's prod came after a secretive effort led by two aides who built a case to toughen 'net neutrality' rules after meetings with online activists, Web startups and traditional telecom giants. Related Article 2: FCC Chairman Tom Wheeler unveiled a proposal that would subject mobile and fixed broadband providers to stricter, utility-like regulations on how they treat traffic over their networks.
CLASSROOM APPLICATION: Students can evaluate the effect of net neutrality regulation on competition among content providers.
QUESTIONS: 
1. (Advanced) What is 'net neutrality'? What are the rationale for net neutrality? Discuss barriers to the entry of content providers.

2. (Advanced) What is the distinction between retail space owners setting higher rents in the busiest shopping areas and broadband providers charging content providers by the speed in which their content is displayed? Answer the question in the context of barriers to entry of retailers and content providers. Also, consider vertical integration issues in which retail space owners also own retail shops and Internet service providers are content providers as well.

3. (Introductory) Should the federal government regulate the Internet?

Reviewed By: James Dearden, Lehigh University

RELATED ARTICLES: 
FCC Chairman Proposes Utility-Like Regulation for Broadband Internet
by Gautham Nagesh
Feb 04, 2015
Page: A1

How White House Thwarted FCC Chief on Internet Rules
by Gautham Nagesh and Brody Mullins
Feb 04, 2015
Page: A1

Labels: ebusiness