Market Power

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

Saturday, February 05, 2005

Nickel Heist!!!!

Someone stole over 3 million nickels that were being trucked from New Jersey to New Orleans. Police recovered the nickels in the Miami area, buried under ground.

Of course, the biggest mystery of all might be what someone does with that many nickels. "That’s the big question," Orihuela said.

"You bury them in your back yard, I guess."
I guess, but they don't earn any interest that way.


Black Market Body Parts

Human organs and other body parts cannot be legally sold in the United States. Instead, according to the law, we must rely on altruism: people are allowed to donate them. This law effectively sets a price ceiling on these "goods", a price ceiling equal to zero.

From the Columbia (Mo) Daily Tribune:

Shaken by scandals involving the black-market sale of body parts, University of California officials are considering inserting supermarket-style bar codes or radio-frequency devices in cadavers to keep track of them.
and later:
Every year, thousands of bodies are donated to U.S. tissue banks and medical schools. Skin, bone and other tissue are often used in transplants. New medical treatments and safety equipment such as bicycle helmets are tested on various body parts. And cadavers are used to teach medical students surgical skills and anatomy.

But there also is a lucrative underground trade in corpses and body parts, despite federal laws against the sale of organs and tissue.
The "lucrative underground trade" is a result of the federal laws, not in spite of them. The outlawing of the sale of organs and body parts does not change the demand for them, but it does alter the number available, making them more scarce. People still want body parts and organs and they are willing to sacrifice things to obtain them. One way to obtain them is through a black market.

Sellers in a black market get high prices because 1. the goods traded are made artificially scarce by legal restrictions and 2. the sellers are taking a risk by illegally selling the goods and they must get compensated in return. Making the sale of the goods legal 1. increases the availability which lowers the price (which makes underground trade less lucrative) and 2. destroys the need for a black market.

Of course, the answer to the problem of black markets is more regulation:

"There’s more regulations that cover a shipment of oranges coming into California than there is a shipment of human knees that are going from a body parts broker in one state to Las Vegas," said Todd Olson, director of anatomical donations at Albert Einstein Medical School of New York.
Is there a black market for oranges? I bet there is.


Friday, February 04, 2005


King at SCSU Scholars posts on the UCLA study that finds that college freshmen are not paying as much attention to racial differences as in the past. I agree with his take on the concern some have for this.

It used to be the concern that there was too much attention paid to the differences between people of different color. Now our focus is supposed to be on celebrating diversity etc. I see these findings as evidence that more college freshmen see people as people, not as people with different colors - and that's not a bad thing except for those whose livelihoods revolves around celebrating diversity.


Ward Churchill, Ripoff Artist

Lawrence White at Division of Labour links to several pieces shooting down Ward Churchill's claim that he is of American Indian descent. Here's one link from the American Indian Movement and a quote:

The sorry part of this is Ward Churchill has fraudulently represented himself as an Indian, and a member of the American Indian Movement, a situation that has lifted him into the position of a lecturer on Indian activism. He has used the American Indian Movement’s chapter in Denver to attack the leadership of the official American Indian Movement with his misinformation and propaganda campaigns.

Ward Churchill has been masquerading as an Indian for years behind his dark glasses and beaded headband. He waves around an honorary membership card that at one time was issued to anyone by the Keetoowah Tribe of Oklahoma. Former President Bill Clinton and many others received these cards, but these cards do not qualify the holder a member of any tribe. He has deceitfully and treacherously fooled innocent and naïve Indian community members in Denver, Colorado, as well as many other people worldwide. Churchill does not represent, nor does he speak on behalf of the American Indian Movement.

This stuff about WC reminds me of a fellow in Missouri (back in 1993 or early 1994) who had branded himself "Chief Wannadoobee." He claimed that he was of American Indian descent and, therefore, his property was its own nation and he could legally grow marijuana on it. Just to spite officials, he painted a big target on top of his house, basically daring officials to shoot at him from the air.


Thursday, February 03, 2005

Dean Wormer Dies

John Vernon, the actor who played Dean Wormer in Animal House, has died.


More on the Lack of a Functioning Price System

Yesterday's Wall Street Journal had this article (paid subscription required) on the problems associated with trying to get medicines to those injured in the tsunami. Without a functioning price system, those with the drugs are forced to search for those who need the drugs and those who need to drugs are forced to wait...

About two weeks later, in consultation with Sri Lanka's Ministry of Health, the Adventist group moved half the drug shipment to provincial health officials. Two Canadian doctors working with the Adventists to assess medical needs in coastal refugee camps transferred 20 boxes of Primaxin to the deputy provincial director of health services for the Galle region.

The doctors took two boxes of drug on their rounds of the camps but didn't find anyone who needed it. "I've treated several people for everything from tooth abscesses to bronchitis," says Darlene Sandrich, one of the Canadian doctors. "I personally have not found any use for this drug." Some victims may have been transferred; some may have recovered and some may have died. Dr. Sandrich says pinpointing specific kinds of cases is harder than it seems. "There is still chaos, confusion," she says.

The phrase I highlighted is key to understanding why markets work well - we don't have to rely on third parties with limited information to make decisions. That's one of the things that those who have a particular distaste for market solutions for medical (and other) products and services often fail to understand - central planning and social engineering, while they may sound good, are extremely hard, and usually impossible, to implement effectively.


Lack of a Functioning Price System

The Wall Street Journal describes how disaster relief folks in Sri Lanka (paid subscription required) are dealing with useless items sent to them in aid packages.

The recent outpouring of tsunami support has brought with it a mountain of unusable stuff from the Western world. That includes cozy winter hats, Arctic-weather tents, cologne and thong underwear. Dubbed "frustrated cargo" by aid workers -- because it often has nowhere to go -- these misfit items are gathering dust in warehouses and creating major headaches for relief workers in the field.

Mounds of donated clothes litter the coastal highway south of Colombo. Bottled water from European mountain streams is flowing freely, raising concern about empties littering the jungle. Medicines that are no longer needed, such as morphine, are feared to be loose in the country.

Some people are putting items of no apparent local value to creative use. Impakt Aid, a Sri Lankan group, cites two dozen goose-down jackets it recently received from a European relief agency. The group forwarded the coats to a refugee camp. There, they were used to wrap babies without diapers.

Many vital needs still aren't being met, even as marginal donations pile up. Government figures record the arrival of 30,000 sheets, but only 100 mattresses. Colombo's main airport says it received 5,000 pajama tops from Qantas Airways, but no bottoms to go with them. The airline won't comment beyond saying that it sent a planeload of supplies to Sri Lanka, primarily medical supplies. Many of the country's more than 300 refugee camps face critical shortages of cough syrup and infection-fighting creams -- even though there are plenty of skimpy undergarments.
and this:

Unwanted medicines pose a more serious problem. Wary of potential epidemics, some doctors and private citizens appear to have unloaded their sample bins and medicine cabinets and shipped whatever they could find. The shipments have included useful antibiotics. But they also included drugs that aren't common in many villages and can easily be abused, such as Valium and antidepressants.

A lot of stuff that nobody wants gets shipped out and eventually gets tossed out. Aid workers have to think of creative ways to use some of the things (thinking that, as with all things, could be put to other uses). Black markets for the Valium and antidepressants are probably working rather well right now. The article presents an interesting look at the sorts of things that happen when there is no operating price system.


Wednesday, February 02, 2005

If You Can't Pay Them

It's letter-of-intent day for college football teams. Missouri got themselves Chase Daniels, the EA Sports High School Player of the Year, the top honor in high school football (I'm told). That makes three Chases that will be on the Tigers.

I've never played organized sports - only disorganized sports - so I have never been involved in recruiting. College teams are not allowed to pay their players, so the creative juices get flowing to try and figure out ways to get kids to come to their schools. Eric at Off-wing Opinion has this piece that focuses on comic books in which the recruited athletes star.

[T}here was the case of Ben Olson, the quarterback who redshirted at BYU, then went on a Mormon mission before deciding he didn't want to return to Utah. According to The Sporting News, Olson received a comic book from Oregon, in which he stars as "The Gunslinger."

Again, there was a catch. The Ducks sent Olson only half of the comic book. The other half, Olson was told, could be picked up when he visited Eugene. He never did, and ultimately committed to UCLA.

Oregon was more successful in its recruitment of James Finley, a junior college wide receiver. Finley also received a comic book, which features Mike Bellotti agonizing on the sidelines during a close game before Finley catches the winning touchdown, leading to a frame featuring Phil Knight (of Nike - Phil) celebrating in his skybox.
What's next? Video games? Probably.

The folks at the University of Michigan used to put out economist trading cards. I think we need to have economist comic books. It'd be a great fund raiser.


Tuesday, February 01, 2005

Aerobics for Air Guitarists

Now *this* is a type of aerobic workout I could really enjoy! The aerobic workout for air guitarists!


The Problem with the NHL

One of my co-bloggers at The Sports Economist, Brian Goff, has a nice post here about the NHL and its problems here. He argues that a salary cap will do little good and that the problems with the NHL are largely self-made.


The Benefit of Moving a Hockey Game

Kevin Buisman, the athletic director at Minnesota State, Mankato, was roundly criticized for moving a Mavericks home hockey game against the Minnesota Gophers to St. Paul's Xcel Energy Center. I blogged about some of the criticism here.

I just got back from a budget meeting where the final figures on costs and revenues from that game were presented: the MSU athletic department earned an additional $148,000 and only incurred an additional $10,000-$12,000 in costs - for an additional net of over $130,000.

Now they gotta spend it. Do you think they'd start an endowment for a professor of sports economics with that cash???????

Me neither.


Unions in Hollywood

Tyler Cowen at Marginal Revolution posts on unions in Hollywood. See here for more information.


Monday, January 31, 2005

How Good is Tom Brady?

Doug Drinen at Sabernomics has some numbers crunched to tell you.



Sheesh. Maybe Sally Anthony needs to learn how not to micromanage a basketball team. She fires her coach because the coach did not follow order given by Anthony to bench a player. After the game, she gets into a shouting match with the brother of an injured player. Good lord. Where did she learn her leadership skills? From Josef Stalin or Saddam Hussein? She sure didn't learn it from Bill Belichik.


My Sentiments Exactly

I taught my night class this evening. I knew that the Missouri Tigers played Kansas tonight. That used to be the second most anticipated athletic event in my mind (next to the MU-Nebraska football game). I would proudly wear my Tiger shirts and would meticulously use only yellow chalk during a game day. This year is different. I have forgotten when the games start (I didn't realize the KU-MU game was being played during my night class and was over by the time class got over). I don't care if I watch them or not. Nick over at Tigerboard sums up my feelings exactly:

"After finally getting a chance to sit down and watch last night’s game that I had recorded, I have come to the conclusion that the Missouri Basketball season is over. There is nothing left to play for, nothing to motivate this team except for pride, and I didn’t see a whole lot of that in last night’s game.

A zone defense is not a new invention. I imagine there are several good books written by knowledgeable coaches that cover exactly how to attack a zone and not let it swallow you alive. I would even wager that there are a couple of these books sitting in Ellis library as you read this. So then I have to ask, why can’t this team seem to overcome a simple 2-3 zone?

I still root for the team to win and will continue to do so until the day I die. However, I am not all that excited about the games anymore. I miss the anticipation I once felt on game day. I miss wanting to change my schedule in order to be able to watch the game. I want to care again, but right now, it is just too painful.

After talking to bunch of other Mizzou fans, I get the idea that I am not alone in my apathy. No one seems to be interested in the Tigers anymore this season. Sure, some of us will still watch the games, but who is really going get worked up about it anymore? I’ll probably applaud and yell at the TV during the game, but I cannot allow myself to become too emotionally invested in the outcome. I have been forced to become uncomfortably numb.

I don’t know what the answer is. Will bringing in a new coach solve the problems? No one can say that for sure. Quin is a smart guy who learned from one of the best in the game. It seems impossible that at least some of that knowledge didn’t instill itself into Quin. I don’t like the idea of canning someone with potential and I think Quin has a lot of potential.

Of course, the results speak for themselves. Having the potential to win games is not the same thing as actually winning games. I doubt any but the most sycophantic fan is going to be willing to wait more than two more years for Quin to transform potential into reality. There are already many many fans who want to see Quin replaced as the coach.

So, what can we expect at the end of this season? I don’t have a crystal ball, but to answer that question, I think it is important to remember that college basketball is a business. Being a business, all decisions are directly related to the bottom line. If it makes financial sense to replace Quin at the end of this season, he will be replaced. If it doesn’t make financial sense, then he will return.

Now, what elements directly affect the bottom line? Some things that add to the bottom line include donations, ticket purchases, suite purchases, and advertising. If Quin were to be replaced, the buyout of his contract would be somewhere between $400K and $2 million depending on which source you want to believe. Let’s split the difference and call it $1.2 million. The business decision then becomes: will the athletic department lose $1.2 million combined from those revenue sources listed above if Quin is retained at the end of this year?

From where I am sitting, I think the answer is no. Mizzou fans are Mizzou fans and will continue to donate to the department no matter what happens. Some small time donors might withhold their $500 or $1000, but the folks that write the big checks will continue to write the big checks. Fans will also purchase tickets to all the games. The arena might not be full, but almost all the seats will be paid for. The suites are already on 5-year deals, so there’s no danger there. And the advertising is already paid for, so no danger their either.

So, Mizzou fans, no matter where you fall on this issue, it seems like a no-brainer to me that Quin will return next year. So, for the benefit of Mizzou Athletics in general, I would suggest that we all continue to root for the Tigers. No matter what, they are still our team. I don’t see the logic in throwing a tantrum on the boards calling for Quin’s head, because it just isn’t going to happen this year. It might make you feel better personally, but it doesn’t do much to help the team. I know it sucks to see the team mired in mediocrity, but don’t turn into a babbling idiot over something you cannot change.

Just my $0.02."


Subsitution Between Labor at McDonalds

The Eclectic Econoclast has this post about a McDonalds in Oregon outsourcing its order to Grand Forks, ND in part to take advantage of the lower minimum wage in North Dakota. A McDonalds in Cape Girardeau, Missouri does it too, but doesn't do it to take advantage of a lower minimum wage, but did it to lower costs:

The man who owns the Cape Girardeau restaurant, Shannon Davis, has linked it and three other of his 12 McDonald's franchises to the Colorado call center, which is run by another McDonald's franchisee, Steven Bigari. And he did it for the same reasons that other business owners have embraced call centers: lower costs, greater speed and fewer mistakes.
This is what firms do - search for the lowest cost of production. If we force them to pay a resource an above-market price, this gives them an incentive to search and/or develop alternative resources. Sometimes it takes time, but it will happen.


Rick Reilly on Flying

Here is a funny article by Rick Reilly of CNN-SI about flying in a fighter jet. Here's a quote.

Biff was to fly me in an F-14D Tomcat, a ridiculously powerful $60 million weapon with nearly as much thrust as weight, not unlike Colin Montgomerie. I was worried about getting airsick, so the night before the flight I asked Biff if there was something I should eat the next morning.

"Bananas," he said.

"For the potassium?" I asked.

"No," Biff said, "because they taste about the same coming up as they do going down."

I know how he feels, getting all airsick etc. That's how I feel when I watch Discovery Wings! Don't ask me how I feel when I get on a giant flying tube!

Thanks to Todd for the pointer.


While You Were Away

Here are a couple of things you can do to your office mate when he/she is away.

When I was in college, my dormmates took all the furniture from my dorm room and arranged it on a ledge outside the window across the hall from my room.


Sunday, January 30, 2005

Protective Services

Are protective services such as those provided by the local fire department public goods? Not in Fairfield, Iowa.



I see we have a new form of spam oozing around blogspot. Some dopey crap about dogs is cluttering up the comments.


Beer is Good For You

In moderation, that is. Not only that, it can help you piss your way out of an avalanche.


Delgado and The Marlins

I posted this and this over at The Sports Economist regarding the signing of Carlos Delgado by the Florida Marlins. The first piece is (fortunately or unfortunately) the first instance I've seen this year of a baseball owner (Peter Angelos of the Orioles) claiming that baseball salaries are getting so out of whack that teams are going to have to raise ticket prices just to pay them. Click on the links to read more.