Market Power

Nice Game!

Mizzou 86 - Arkansas 64.  Wow!  What a difference a year and a coach makes.

For the record, this is the first time since I've been a Mizzou fan that Mizzou has beaten Arkansas.

Update:  Here's the KC Star:

Missouri trailed 15-12 when the Tigers — fueled by that 40 Minutes of Hell defense that Nolan Richardson taught and Missouri coach Mike Anderson learned as an assistant coach at Arkansas — ripped off an 18-5 run that put MU up 30-20 on a Keon Lawrence layup with 7:59 left in the opening half.

The Tigers closed the half on a 12-0 run. Arkansas missed its final seven shots.

“We wanted to kind of give them a gut check, kind of punch them,” said Matt Lawrence, who hit all five of his baskets from three-point range on the way to 19 points.

A basketball team with a killer instinct?  I haven't seen that in awhile from the Tigers.  It's also nice to see that the following plays have been taken out of the offensive playbook:

1. Pass the ball around the perimeter right and stand around.
2. Pass the ball around the perimeter left and stand around.
3. Dribble the ball at the top of the key and stand around.
4. Stand around and let someone jack up a deep three (especially useful against the zone defense).

 

Unions and Wal Mart

Principle-agent problems between union leaders and members aside, unions want to obtain "more" from their employers.  They are best-able to obtain more from employers when their employers have market power in their output market.  Having market power allows firms to earn economic profits which the union can then attempt to capture.  So, as the always-astute Coyote observes, it would be no surprise to find out that unions are behind the San Diego city council ban on Wal-Mart Super Centers.

A Wal-Mart Super Center differs from a large Wal-Mart mainly in that is sells groceries.  And in fact the legislation does not ban all super-large stores, just ones that sell groceries (Wal-Mart could still build a super-honkin large store in San Diego as long as it didn't sell food).  Well, this should give us a clue.  It tells us that the politicos are not against large stores, just against large new stores that compete with existing grocery stores.

And this puts the lie to supporters statements that their concern is that Wal-Mart "puts smaller competitors out of business."  There aren't any "smaller competitors" in California grocery stores, they are all large chains run by corporations.  And if there are any local fresh produce shops out there, I don't think their customer base is one to run off to Wal-Mart.  This is about protecting grocery retailers from competition.  Why?  Well, there is one other thing we need to know, and that is that California grocers all have extremely powerful and politically connected unions.

Unions are organizations that serve workers, not the general populace or workers in general.  Union leaders that use scarce union resources to obtain things for others at the expense of the workers they serve are not going to be union leaders for very long.  It's only by coincidence that the interests of the populace in general and unions align.

Sluggy Bear

You want one reason why I'm glad Bob Huggins is NOT the Mizzou coach?  Watch this gem of a crappy move by Colon.  Nice cheap shot, Colon.

A Brutal Game

Craig Depken posts on the reforms put in place in high school and collegiate football 100 years ago:

The 1906 college/high school football season was the first played under the new rules designed to open the game and reduce the probability of severe injury. At the end of the season, the initial impact of the reforms were reported in the Nov. 26, 1906 NYT:

Eleven players were killed and 104 were injured in the United States during the football season according to the Chicago Tribune. These figures are compared with the casualties of 1905, when 18 players were killed and 159 severely injured, and, according to The Tribune, show that "debrutalized" football has accomplished in a large degree the object aimed at, in rendering the game less dangerous to life and limb.

The decrease in casualties is especially marked among high school players. In the season of 1905 11 high school players were killed and 47 injured, while in the season just closed seven were killed and 25 hurt. All college and high school games this year were played under the new rules drawn up after the close of last season to satisfy the agitation for less dangerous football. This year not one fatality has occurred in the game played by the larger American colleges.

Markets in Everything

Caffeinated beer.  No, really.  Natty Up, produced by Anheuser Busch, is a caffeinated beer.  I was offerred some this past weekend.  The thought of a stimulating depressant didn't sound too good to me, so I politely declined.

If You Can't Win In Competiton, Maybe You Can Win in Lobbying

I visited Columbia, Mo., this past weekend and visited a grocery store that I frequented when I lived there.  I was reminded of a fact:  I can buy wine with my groceries in Missouri grocery stores.  I cannot in Minnesota grocery stores*.  But there's a push to change Minnesota law. 

In Minnesota, the last item means a stop at the liquor store after getting the groceries.

That’s an issue grocers across the state hope to change in the upcoming legislative session.

The owners of little liquor stores and their lobbyists are up in arms.  If you can't beat 'em, then you legislate 'em.

...Jim Ferrall, executive director of the Minnesota Licensed Beverage Association, said the grocers’ lobbying efforts are misleading and selfish. And he said opinion polls can change dramatically once people have information.

 

“If you ask people if they want it more convenient, they say, ‘Sure.’ But if they think about other people and how it will affect them, they realize it’s just a selfish discussion by grocers,” Farrell said.

Grocers want to offer customers another product and the liquor store lobby essentially wants to keep customers from having that choice.  Among other arguments, the liquor store lobby trots out the "it's to save the kids" argument:  they will be more vigilant about not selling to minors.  At the margin, how many kids don't obtain an adult beverage because of the regulations?  My own personal experience was that when my friends and I felt saucy and wanted to get sauced, we could buy from the local liquor stores as easily as we could from the local grocers.  And if we couldn't find someone to sell to us, we'd usually be able to find someone to buy for us.  But please don't tell my mom.  She thinks I'm an angel.

Anyways, the grocers are not seeking regulation that forces customers to go to their stores.  They'll still have the option of going to the small stores.  But the liquor lobby wants to squash this effort because they'll lose market power.  Indeed, who's the selfish party?

*I can buy my favorite adult beverage in liquor stores run by but housed next to the grocery stores.  I physically have to leave the grocery store to enter the liquor store.  It would be more convenient if I could buy my wine/snotty beer along with the rest of my groceries at the same register.  It would also be more convenient if I could buy my favorite adult beverages on Sundays and after 10 o'clock  from places other than bars, but that's beside the point. 

Here's a document on adult beverage regulations in Minnesota and their impact on beer and wine prices.  At the margin, are the benefits from the regulation really worth the costs?
 

Topics in Supply and Demand: Christmas Trees

Supply and demand in action:

Christmas tree prices are set to rise in Germany, Britain and elsewhere because of a shortage of supply from main exporter Denmark, producers said on Wednesday.

Not to be picky, but is this really a shortage or just a decrease in supply?  Maybe it's both if the "right" price hasn't been "found" yet.

The price for a 2-metre Nordmann Fir tree, one of the most popular breeds, will go up 10 to 20 percent compared to last year, said Kaj Ostergaard, head of the Danish Christmas Tree Growers Association.

...The seeds of the shortage were planted between 1998 and 2004, when tree prices collapsed due to oversupply and some Danish growers switched to other crops.

HT to Division of Labour
  

The A's Owner, Lou Wolff

Here's a story about Oakland A's owner Lou Wolff and how he made his moolah.

Quote of the Month

Allen Sanderson on Principles of Economics at the University of Chicago (although one could say a similar thing about many Principles classes at many different schools):

“When you hear, ‘The economics department at U. of C.,’ one’s free association is ‘pro-business, greedy bastards,’” says Sanderson (pause, jaw thrust) in the first lecture. “I tend to think that’s not the case. Greedy bastards we may be, but we’re not pro-business. Republicans tend to be very pro-business. It’s a genetic defect of Republicans. Democrats tend to be anti-business, another genetic defect. We are not anti-business; we are not pro-business. We are pro-choice in the ultimate sense of pro-market. Based on empirical work, macro and micro solutions are probably better worked out by private markets than government intervention.”

How great is that?  Can I add that Sanderson is "one of us" - someone who writes about the economics of sports?

HT to Greg Mankiw

Topics in Monopoly - DeBeers

Principles students this semester throughout the world either have or are going to study monopolistic markets - their causes and the behavior of monopolists.  I ran across the following Economist article from 2004 that some students may find useful in understanding how one of the classic monpolies, DeBeers, got its market power and why even DeBeers' market power is difficult to maintain in the long run.