Market Power

Musings by an academic economist on the power of markets and the power over markets.

Saturday, November 20, 2004

Advertised: I Need an Organ

You cannot sell your organs in the United States. You can only donate them. This restriction is essentially a price ceiling set at 0 and it creates a shortage of organs. Since the market cannot clear via the price system, people find ways to get around the price restrictions. One man in Houston bought billboards to advertise his need for a new liver. A quote from the article:

“… a Houston man, Todd Krampitz, bought a pair of billboards and gave a series of media interviews soliciting a liver donor. It worked: Someone died, and the person’s family had heard about Krampitz and opted to donate directly to him.”

Mr. Krampitz is not the only one. At the end of the article, we learn about other billboards across the country and we learn about websites advertising for livers.

Who gets paid? The families who shared their loved-one’s organ? Nope. The billboard owners and the people who sold the rights to the web domain names receive the income.

This is just another unintended consequence of the restriction.

Instead of doing the right thing and allowing the sale of organs to those who need them, activists, acting on ethical grounds, will likely push for a ban on advertising for an organ. All this will do is cause people to find another way to get around the restrictions - and people will continue to needlessly die.


Friday, November 19, 2004


Remember how much DVD players used to cost? I went to Target today to do some shopping. They had 7 or 8 different brands of DVD players and a couple of other brands of DVD-VCR players. I didn’t look at the prices of the latter, but the DVD-only players were no more than $100. All were of a quality comparable to the one I bought a few years back for double that price.

Isn’t competition cool?


My Mom Made Me Do It!

Leo Criswell isn’t particularly happy about signing a letter of intent (i.e. a contract) to play basketball for the Missouri Tigers. He narrowed his choices to Kentucky and Missouri, reportedly gave Kentucky a verbal, but his mother told him to sign with Missouri. Apparently his mom, Georgia Lyons of Piper Ks., wanted Leo to a. be closer to home and b. get an education. He wanted to get trained to go to the NBA.

While people are saying that he didn’t want to go to Missouri, this isn't the case. He told his mom that he had narrowed his choices to Missouri and Kentucky, and she pushed him to go to Missouri. This just reveals his preference for going to Kentucky: he liked both, but he liked Kentucky better. But he deferred to ma.

Kids change their minds all the time, but the magnitude of such indecision gets magnified when it comes to deciding where to play major college sports, what with all the coverage recruiting gets. That’s especially true at Missouri. The press that coves Mizzou sports is pretty heavy. There are two major metropolitan areas with lots of Tiger fans (and haters) in them. There is also a very good journalism school at the university with its own daily newspaper and lots of aspiring news hounds. Whatever is said that is negative is going to get a lot of coverage – especially now in the wake of the program’s recent troubles. After all, people read about bad news.

If Leo really preferred Kentucky and doesn’t warm up to being a Tiger, he could become a distraction to the team. And if he does warm up, he’ll have to play twice as hard to cause people to forget about this little incident, or at least treat it like a little thing. This is quite a burden to put on a high schooler.


Thursday, November 18, 2004


The Econoclast has some interesting anecdotal evidence on the effect of the NHL lockout on NHL players. See here.

The Econoclast argues that most NHL players earn tremendous rents over their next-best alternative. That’s probably true of a lot of athletes in most sports.

When an employer locks out its union employees, it tries to impose costs on the union. When a union strikes, it tries to impose costs on the employer. Regardless of who formally initiated the NHL dispute, players are feeling a pinch and teams are feeling a pinch. We’ll see who cracks first.


Preseason Rankings

Wrestling season is beginning in the NCAA. As with all NCAA sports, there are preseason rankings quantifying who is going to do what. Today’s KC Star had this article on the now-mighty Missouri Tiger grapplers, ranked 10th in the nation this year after receiving their best ranking at the end of any season last year – 13th. A quote from head coach Brian Smith:

“I don't think that we are a top-10 team right now. A lot of kids have never been in the lineup. Rankings are silly with a lot of unknowns…”

I don’t think preseason rankings are silly at all, but the importance attached to them certainly could be silly. I fully understand why a coach of a team ranked in the preseason might cringe. The kids start to believe their own ranking, start thinking that they can just show up and beat “lesser” teams, and before they know it, the season is lost. Does Missouri vs. Troy University ring a bell? Never underestimate the power of momentum in sports outcomes.

There are a lot of interesting things that can be learned from studying collegiate sports rankings. One interesting study would be to examine how the rankings in a collegiate sport change over the course of the season. Here is one question that could be answered: how long does it take for the previous year’s performance (and a team’s tradition) to become inconsequential in determining the current year’s ranking?


Creation of a Legacy

There is an excellent article (subscription required) in today’s Wall Street Journal about Alan Greenspan and the legacy he is leaving. It’s the first of a two-part series. We are discussing the role of the Federal Reserve in my Principles of Macroeconomics class right now, and this article fits perfectly into what we’re talking about right now.


On Title IX - Part One

This interesting article appeared in the online version of the Chronicle of Higher Education (subscription required). It deals with the decrease in the number of colleges that have separate women’s athletic departments and men’s athletic departments.

The article notes that Title IX played a large part in this:

“After the passage of Title IX of the Education Amendments of 1972, most colleges eliminated those women's departments, moving women's teams into men's departments and naming the women's athletics director the associate athletics director. Only a handful of colleges maintained separate departments.”

College athletic departments must account for the costs they generate. The passage quoted above suggests that Title IX created some restrictions, and thus some costs, that directed universities to delete some administrative duplicity associated with having two separate athletic departments. This deletion would free up resources to ultimately be used to come into compliance with Title IX.

Over the next few weeks, I plan to post a few thoughts on the costs associated with the ways that colleges can use to come into compliance with Title IX.


NHL Lockout Update

According to this article in the Chicago Tribune, player agents have publicly acknowledged solidarity with the union. This isn’t surprising since they earn their income from representing players, not owners.


Tuesday, November 16, 2004

Free Agency

For sports economist geeks like me, the off-season is almost as interesting, and sometimes more interesting, than the regular season – in any professional sport.

November 11th was the day that baseball free agents could start negotiating with teams. This year there are over 300 players eligible for free agency according to this link at While there have been a few moves, the real fun will start soon as teams and players get a feel for this year’s market.

The Washington Expos have signed two players already.

What are the odds that the White Sox will sign one of Scott Boras’s clients? Not very good according to this article.

I’m following the market a little closer than I usually do. I am working on a paper on free agency and am gathering data from this year’s market to add to it.


Sports Union Tentatively Agrees to a new Contract

Guess what sports union agreed to a tentative contract with the league’s owners. No, not that one. This one!


Back to It

I've been away for a couple of days. I had to write several quizzes plus it's registration time at the Harvard of South Central Minnesota. Add to that preparing lecture notes and all the other fun things that occur at this time of the semester. What's the result?

No blogging.

I should have some stuff to say about something by tomorrow morning.


Monday, November 15, 2004

Eerie Sunday Drive

I took my two boys out for a drive yesterday over the noon hour. Alex wanted to go to the apple orchard up in Belle Plain to get some caramel apples. It was a nice day and the trip would give us a chance to get out and about.

Instead of taking the main drag, we went up back roads on the east side of the Minnesota River and went towards the town of Kasota. We stopped to watch a train rumble by, and proceeded towards Kasota, a small town about 8 miles north of Mankato. As we approached the town, I saw two police cruisers parked on the side of the road near the park where I sometimes take my kids to play. They had a large area marked off with yellow tape, so I thought there was some sort of official thing going on, but wasn't sure what.

Then I saw the body. I shit you not. Here's a Minneapolis Star-Tribune story about what I saw (free subscription needed).

Some ladies had found the body of a middle-aged woman lying face down near the park. At this time, police suspect foul play.