Market Power

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

Saturday, January 15, 2005

Light Blogging

Blogging will be light over the next week or so as the new semester begins.


Friday, January 14, 2005

More Blogger Merging

Craig Depken at Heavy Lifting is joining the ranks of Division of Labour.


Thursday, January 13, 2005

Distribution Disruptions

Short term. Short term. Short term.


Eminent Domain

I don't know the particulars of this situation, but this lawsuit brings a different face to the public subisidization of sports stadiums.


Compensating Differences

I found this little passage in this article in Slate:

Anna Benson, FHM's pick for "baseball's hottest wife," grabbed attention recently by floating the idea of an illicit clubhouse romp during an appearance on Howard Stern's show. If her husband, Mets pitcher Kris Benson, ever cheated on her then she would "do everybody on his whole team," she told Stern. After a bit of egging on, Benson agreed that this hypothetical locker room gang bang would also include coaches, groundskeepers, and bat boys. The New York Post's headline the next day: "MET WIFE: I'M A TEAM PLAYER."

#1. Is this a compensating difference for the Mets?
#2. No wonder the Mets signed Benson to a 3-year deal with a club option for a 4th.
#3. All else equal, does this make it more likely that the Mets will pick up Benson's option?
#4. Now we know the real reason why Beltran et al came to the Mets.


Wednesday, January 12, 2005


Last week, I traveled to Philadelphia for the mid year economists' convention. When I go to these things, I like to take some time to see the sites around town. This time I spent several hours at Independence National Park, home of the Liberty Bell, Independence Hall (where the details of the US Declaration of Independence and the Constitution were hammered out), and other historical sites.

One thing that impressed me (besides the security measures!) was the amount of the various presentations I attended and exhibits I viewed that focusesd on the various issues in US history that are antithetical to the notion of liberty: namely slavery, "Native American" issues, and womens' suffrage. I appreciated the irony.

Yet I found the presentations and exhibits, at least the ones that I saw, lacking. Standing in Independence Hall, standing outside of the grave of Ben Franklin, I thought about the millions of people who have immigrated to this country over the years and still immigrate to this country. Of all their choices, they chose to come here, in large part because of the political and economic freedoms that were first hammered out in Philly by Thomas Jefferson, John Adams, etc. .


Monday, January 10, 2005

Dr. Teeth or the Medicine Show?

This morning's Wall Street Journal has this very interesting article about dentists and doctors. It tells the story of two brothers-in-law, one a medical doctor and the other a dentist. Dr. Bryson is the dentist (there is a quote from him below). Dentist salaries are surpassing those of similar types of medical dotors. Dentists are also working fewer hours, on average:

Once the poor relations in the medical field, dentists in the past few years have started making more money than many types of physicians, including internal-medicine doctors, pediatricians, psychiatrists, and those in family practice, according to survey data from the American Dental Association and American Medical Association.

On average, general dentists in 2000, the most recent year for which comparative data are available, earned $166,460 -- compared with $164,100 for general internal-medicine doctors, $145,700 for psychiatrists, $144,700 for family-practice physicians, and $137,800 for pediatricians. All indications are that dentists have at least kept pace with physicians since then.

Those figures are a sharp contrast to 1988, when the average general dentist made $78,000, two-thirds the level of the average internal-medicine doctor, and behind every other type of physician. From 1988 to 2000, dentists' incomes more than doubled, while the average physician's income grew 42%. The rate of inflation during that same period was 46%.

Factor in hours worked -- dentists tend to put in 40-hour weeks, the ADA says, while the AMA says physicians generally work 50 to 55 hours -- and the discrepancy is even greater.

But we don't have the kinds of dental problems these days that we had back in the 50's.

Dentists have grown richer even as cavities, once the main cause for visiting them, have declined, largely because of fluoridation of drinking water and improved preventive care. According to a study published in the Journal of the American Dental Association in 1999, cavities in 6-to-18-year-olds dropped by three-fifths from the early 1970s to the early 1990s -- even though many children in lower socioeconomic groups still lack adequate dental care.

As people born in the 1960s and later have grown into adulthood, they tend to need fewer fillings than their parents did and are keeping their teeth longer. Painful disease-related procedures such as root canals are declining, too.

What is happening to cause this switch? Three quotes from the article

In part, it's because dentists have avoided being flattened by the managed-care steamroller, and instead many have turned into upscale marketers. ...

Dentists wrung their hands over their inability to get more insurance coverage -- a failure that now looks heaven-sent. ...

"We shifted from needs-based dentistry to wants-based dentistry," says the youthful-looking Dr. Bryson, who has a dazzling smile. "It has totally transformed our practice and our personal lives. We see a much smaller number of patients, at a slower pace. I can't wait to get in in the morning."

Dentists, who aren't as highly regulated as many medical doctors, are thus able to steer their resources towards the things that consumers want most - cosmetic dental work. And both the patients and dentists are doing nicely, thank you.

So we have a tale of two professions. One is micromanaged. The professionals have had their reimbursements become stagnant while at the same time they have had their overhead increased, leaving them with less to take home. The micromanagement also means that their costs have increased. The other profession is not micromanaged (or at least not to the degree of the other profession), leaving the entrepreurial ability of the professional to decide where to put resources.

Medical care has been micromanaged in the hopes of making medical care affordable to all. I realize that doctors still make a comfortable living. Still, by making it affordable, the incentives to supply the medical care have also been altered as well - and not to the good side of the docket.

Crystal ball time: what has happened to the medical doctor profession will probably happen to the pharmacy profession as well.


Civil War Maps Online

I am a bit of a US Civil War buff. One of my favorite programs of all time is Ken Burns' Civil War documentary. So I was pleasantly surprised to see that the Library of Congress has many original Civil War battlefield maps online now. Click here.


An Honor

Skip Sauer of The Sports Economist has invited John Palmer of The Econoclast blog and me to join his blog. I am honored to join them. I will continue to blog here at Market Power but I plan to do much of my sports economics-related blogging at The Sports Economist.

I also want to think Bill Sjostrom of Atlantic Blog on adding Market Power to his links. I must take issue with one thing (for clarification): I am a nut who likes sports, not just a sports nut ;-). People who know me personally know that I am nutty (in a good way, IMHO). Being a Cubs and Missouri Tiger follower will do that to a person. Had I played either sport in an organized way, I would have made a good kicker/punter in football or a good reliever in baseball - at least in terms of the mentality often associated with the players who man these positions.