Market Power

Your Tax Dollars at Work

The $2000 FEMA debit cards are in part going to spur growth in the food service and  drinking places industry*:

On the heels of a report earlier this week that Atlanta area Katrina victims were using $2,000 debit cards to purchase luxury items like Louis Vuitton handbags, Houston police yesterday discovered the cards, provided by FEMA and the Red Cross, being used at local strip clubs.

... According to a report by KPRC, Channel 2, in Houston, a manager at Caligula XXI Gentlemen's Club said he has seen at least one debit card used at his club. A bartender at Baby Dolls, identified only as "Abby," said she has seen many of the cards used at her establishment.

Your tax dollars at work.

*I read through the NAICS definitions and this site says that nightclubs are excluded from the performing arts sector,

Is That a Spiral Galaxy?

No.  It's an aurora shot by Jarkko Rosenstrom of Saarijarvi Finland on September 10th.

Here are some more aurora pictures at Spaceweather.com.

The Legal Environs of Sports Telecasts

Why don't NFL teams play on Saturday until after the high school and college seasons end?  Because if they did so and televised their games, they would be in violation of the Sherman Antitrust Act. 

There is no rule that I'm aware of that restricts the NFL from having games on Thursday night, but even though that seems to be a big night for TV, the NFL doesn't have many games on Thursday.  Here is a quote from an article from waaaay back in 2002 that describes why this is so:

Tim Spengler, director of national broadcast for Initiative Media, said that there would be risks to the ratings and ad rates of the other NFL games, including ESPN's Sunday night game, due to too much football inventory. But he also believes a Thursday Night Football could be an effective way to reach the male viewers, both those 18 to 34 and 18 to 49 years old, who watch three current national NFL games in greater numbers than any of the Thursday night hits.

Here is the section of the US Code that describes this legality.  Here is a link to chapter 32 of Title 15 of the US Code that deals with the telecasts of professional sports.  Here is another link with information on the1961 Sports Broadcasting Act.

Everything About Cricket

Students in my Sports Economics course today wanted to know about cricket.  Here from, of course, Wikipedia, is everything you would (probably) want to know about cricket.

Be Glad You are Not This Guy's Lawyer

The trial of Chai Soua Vang, the man in trial for the murder of 6 hunters in Wisconsin, had this to say when he took the stand to testify yesterday:

In a cross-examination that may devastate Vang's claim that he was acting in self-defense, he said landowner Robert Crotteau and his 20-year-old son, Joe, deserved what they got when Vang chased them down and fatally shot each in the back, though Vang acknowledged that neither was armed.

Robert Crotteau deserved to die "because he's the one who confronted me and called me names and that's just who he is," Vang testified, as members of Crotteau's family appeared tearful and stunned.

Joe Crotteau deserved to die " 'cause he accused me of giving him the finger and tried to cut in front of me," Vang said, after describing how the younger Crotteau blocked him from leaving as his father profanely berated Vang for trespassing on the family's hunting land.

I wouldn't look down on Vang's lawyer if I saw him down a bottle of Jack Daniels right there in the courtroom.

Update:  Vang has been found guilty of first-degree murder.

Teaching Principles of Economics

In a post about Indonesia's energy policy, King Banaian at SCSU Scholars comments on what he thinks is the most important concept to be taught at the Principles level in economics:

When I'm asked what the most important concept in economics is, most people expect me to say supply and demand. I actually answer comparative advantage.

Agreed.  In my undergraduate studies, I never heard the term comparative advantage (we never studied international trade in my courses).  I never heard the term until I was well into the graduate program at the University of Nebraska-Omaha.  But now, since a primary focus of my Principles of Microeconomics course is to show students how voluntary private exchange is the true workhorse of any well-functioning economy, and since exchanges between people are largely based on comparative advantage, comparative advantage is one of the first things we cover - and I cover it in class instead of production possibilities. 

Indeed, if it weren't necessary for students to have been exposed to the concept of opportunity cost before they learn about comparative advantage, I'd teach opportunity cost second.

Update:  Stephen Karlson over at Cold Springs Shops does similar things in his Principles class (thanks for the trackbacks, Stephen!).

I begin with voluntary exchange of already existing goods (Tom Sawyer is in the supporting cast) and introduce production by way of voluntary exchange between producers who would otherwise practice autarky. (I borrow heavily from Alchian and Allen here; Robert Frost and Socrates get involved.) Hence, the First Principle of Social Organization: There are incentives for the low-opportunity cost producers of goods to specialize in those goods. (Thus, students have a logical basis for criticizing the use of firemen as leaflet distributors as well as a way of resolving the paradox of a rich country importing food from a poor country.) Not only that, the production possibility frontier is a logical extension of opportunity cost and comparative advantage. At Northern Illinois, most of my price theory class will take income theory next.

One other thing to note:  my micro students get exposed to the production possibilities frontier through a reading assignment.

Picketers for Hire

You have probably read the story of the Wal Mart picketers in Las Vegas who were hired as temps to picket.  Here's a quote that caught my eye:

The union accuses Wal-Mart of dragging down wages and working conditions for other grocery-store workers across the nation. "Whether you work or shop at Wal-Mart, the giant retailer's employment practices affect your wages. Wal-Mart leads the race to the bottom in wages and health-care," says the UFCW's website. "As the largest corporation in the world, Wal-Mart has a responsibility to the people who built it. Wal-Mart jobs offer low pay, inadequate and unaffordable healthcare, and off the clock work."

But standing with a union-supplied sign on his shoulder that reads, Don't Shop WalMart: Below Area Standards, picketer and former Wal-Mart employee Sal Rivera says about the notorious working conditions of his former big-box employer: "I can't complain. It wasn't bad. They started paying me at $6.75, and after three months I was already getting $7, then I got Employee of the Month, and by the time I left (in less than one year), I was making $8.63 an hour." Rivera worked in maintenance and quit four years ago for personal reasons, he says. He would consider reapplying.

And another:

Another woman, Greer said, had huge blisters on her feet and he took her inside to the Wal-Mart pharmacy. The pharmacist recommended some balm, and Greer bought it for her. Since then, he said, other picketers have purchased the balm for their blisters inside the Wal-Mart they are protesting.

Isn't it Ironic?

"Potty" Humor

John Chilton over at the Emirates Economist alerts us to a whole bunch of construction projects in the United Arab Emirates.  One description really caught my eye (emphasis mine):

"Sarouh Real Estate has launched a estimated Dh20-25 billion flag-ship project-Shams Abu Dhabi to be constructed on the Al Reem Island in the backyard of Abu Dhabi Island, where 100-skycrappers (sic), along with luxury hotels, hospitals, schools, mosques, commercial and entertainment complexes would be built, by not only Sarouh but by the private developers.

The questions just keep coming:  what's a skycrapper?  Is a skycrapper a really tall toilet?  Do they provide ladders or elevators to get to the top of the skycrapper?  What is the benefit from crapping in the sky?  Why are there only 100 of them?  Are the private developers building the skycrappers or is that a public works project?

Thanks to John Palmer for the link.

Update: I just did a Google search on skycrapper and came up with over 1500 results.  Google wanted to know if I meant to search for skyscraper.  Here's my favorite that seems to confirm that there is such a thing as a skycrapper.  Here's some really crappy research.  :-)

Demand Curves Slope Down - An Example from Sports

From the Charlotte Observer (membership req'd):

In two months, the Charlotte Bobcats begin playing in a new, publicly funded uptown arena. Typically, new arenas boost home attendance for NBA teams, but so far that's not the indication for the Bobcats.

Two informed sources say the Bobcats have sold about 7,000 season tickets -- roughly 2,000 behind last season's season-ticket base, when they had the third-lowest home attendance in the NBA. Several fans said they dropped their tickets in part because of a steep rise in ticket prices.

...  So far this new building hasn't created much buzz for the Bobcats. That could be because of the ticket prices -- most jumping 25 percent to 100 percent -- that accompany the move to the new building.

Mark Thompson, a Charlotte-based money manager, was part of a group last season that bought two Bobcats season tickets. The seats were close to the floor, at center court, and each ticket cost $75. Thompson bought a pair of tickets to 10 games.

He seems like the Bobcats' target customer -- young, affluent and a sports fan who buys Carolina Panthers and Davidson basketball tickets. But he passed on Bobcats tickets this season because he felt the cost exceeds the value.

Earlier in the piece:

Sixteen of the past 17 NBA teams moving to a new arena in the same city saw home attendance rise in the first season. Most recently, the Houston Rockets sold an extra 1,844 seats per game, moving into the Toyota Center. The only team that saw home attendance fall -- the San Antonio Spurs -- did so intentionally, moving out of the Alamodome, a football stadium with poor sight lines for basketball.

On average, those teams increased home attendance by 2,366 per game -- an extra 97,000 tickets, per team, over a 41-game home season.

The hope for teams is that new arenas will have amenities that fans are willing to pay extra for, so the hope is that the new arena will increase demand for the team's games. But demand curves still slope downward, and this is borne out by the article.

Price-setting is largely a trial-and-error process since businesses never really know what the demand for their product would be. But one would expect that the Bobcat officials would have a decent handle on the demand for their team's games, even in the new arena.

Cross posted at The Sports Economist.

Google Search the Blogosphere

Google has released its search engine for the blogosphere at blogsearch.google.com/

I just googled my name and came up with over 3,000 entries.