Market Power

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

Saturday, February 19, 2005

They're Baaaack!

The two sides in the hockey negotiations are at it again. To game theorists, a "credible threat" is some action that can be rationally taken by a player that will impose costs on his/her opponent. What an interesting example of a credible threat (cancelling the season) which, once played, can be credibly retracted if a settlement be reached. What do the game theorists have to say about that one? I didn't realize the NHL could be so cool! ;-)


I've Been Mobbed...

Thanks! I've become a member of the Minnesota Organization of Bloggers (MOB), thanks to King at SCSU Scholars. Thanks, King!


What's In a Name?

Briar Cliff College in Sioux City has been renamed "Briar Cliff University." Central Methodist College in little Fayette, Missouri has been renamed "Central Methodist University." Same with my parents' alma mater (class of 52) Park College, er, Park University in Park, Mo. I teach at Minnesota State University, Mankato - the old Mankato State University. I still call it Mankato State from time to time.

For years now, Southwest Missouri State University in Springfield has been trying to garner enough votes in the state legislature to rename itself "Missouri State University." Usually with opposition from the legislators from Columbia, home of ol' Mizzou, the measures go down to defeat.

They are trying to get the name switched again. The Mizzou folks down there are debating the name change. Here's a thread from, oddly enough, the football board at What does an economist say? Well some Tigerboarder actually had the guts to say this:

Adam Smith's "Invisible Hand Theory" ... you might want to check out this guy named Milton Friedman while you're at it. See what they might say about a name change.
First off, nobody has joined the thread created by that person. I'm not surprised, but I am a bit amused. If you want to be left alone in a crowd, when somebody asks you what you do for a living, tell them you are an economist or, better yet, tell them you teach economics. It's a sure-fire conversation killer. You might as well tell them that you enjoy wetting the bed at night.

Second, what would Smith and Friedman say about the name change? My guess is this: the school wants to change its name in an attempt to improve the quality of students who apply and to increase the amount of funds coming into the school. But if the school only changes its name but doesn't change what it is (i.e. its standards), the new name won't do a darn bit of good.


Someone Gets It!

This morning's cat box liner had a letter to the editor from a fella in St. Peter about stadiums. The fella, Ron Arndt, gets it - almost.

I have read two of Andrew Zimbalist's books on the economics of major league sports. He is professor of economics at Smith College and considered the top person in his field.

On Page 125 of his book, "May the Best Team Win," he stated the following, "Every independent economic analysis on the impact of stadiums has found no predictable positive effect on output or employment. Some studies have even concluded that there is a possible negative impact. Why? In St. Louis, the baseball team accounts for around 0.3 percent of the local economic activity."

My point is simply this. The Minnesota Legislature should not be wasting time on discussions about privately-owned sports teams and their facilities.

That 0.3% quoted above represents gross spending on the Cardinals. If the Cardinals folded, the St. Louis economy would not contract by 0.3% (and the Cubs *still* wouldn't be able to consistently win the division) but by a smaller amount because most of the spending on the Cards will be spent in other areas of the city. Heck, the economy may even expand a small bit.


Friday, February 18, 2005

More Tony Kornheiser Fan Stuff

I miss the days of, but now that Tony's back on the radio, the unofficial TK websites are popping up. Here's one called This Website Stinks.


Bargaining Power

I posted this over at The Sports Economist, but all y'all might find it interesting too.

Relative bargaining power is a negotiator's willingness and ability to accept a dispute. In actual negotiations, one negotiator never knows how much bargaining power his opponent has, but the opponent's actions may reveal some information about how much relative power he thinks he has.

Turn to the NHL. Strikes are weapons used by unions to impose costs on their employers. The strikes impose costs on the workers too, but if the strike causes the employer to at least partially give ground while the union holds firm, the strike reveals some of the relative bargaining power of the employer. Lockouts are weapons used by employers to impose costs on their union workers (and on the employers as well). Like strikes, lockouts can cause the unions to reveal its relative bargaining power.

The NHL lockout has, at least in terms of the revelation of union relative bargaining power, been very successful so far. The union caved in, agreeing to a salary cap that its leaders said they would never accept. This tells us a lot of the relative willingness of the union to fight. Nicholas Costonika of the Detroit Free Press has this to say:
In canceling the season, the owners have shown that, at the end of the day, like it or not, this is their league. They can burn it down to build it back up again if they want -- and they're willing.

Hockey is the players' livelihood. Hockey used to be the owners' livelihood, when it was a family business, but it's a hobby for businessmen these days.

Look at the Detroit area's three NHL owners: Tampa Bay's Bill Davidson made his fortune in glass, the Red Wings' Mike Ilitch made his in pizza, Carolina's Peter Karmanos made his in computers. They can live without the game.

One of the determinants of relative bargaining power is the overall business climate. Over the past couple of years, the overall business climate for the teams, especially the "small market" teams, has been poor - my co-blogger, John Palmer, posts here that it is of the teams' own doing. Brian Goff notes here that some owners aren't happy with the cancelling of the season either. But, the teams have held firm so far and the union has caved - the teams have been more willing and able to accept the costs imposed by the lockout than the players have. Any final agreement is going to be tilted more towards what the teams' currently want - maybe much, much more.


Shots Fired in the Minnesota Stadium War

I cross-posted this at The Sports Economist today. From today's St. Paul Pioneer Press:

Anoka County is ready to raise sales taxes to pay for a proposed Vikings stadium — without asking permission from voters.

That's akin to taxation without representation, say stadium opponents.

"They aren't asking us to pay for it. They are making us pay for it, and there's a big difference," said Burt Hanson of Anoka, a 65-year-old retiree who is involved in an anti-tax group that opposes the stadium-funding plan.

But there's nothing illegal — or even especially unusual — about such taxes in Minnesota. As many other cities and counties have done, Anoka County could indeed approve a 0.75 percent sales-tax increase to fund its share of a Vikings stadium without a referendum, as long as the state Legislature gives its OK.

Of course there's the requisite "economic impact" statement:

If the Vikings end up moving to a proposed $700 million stadium in Blaine, Novak said, voters will ultimately be pleased. That's because officials forecast that an envisioned $1.5 billion multi-use complex would create about 6,000 new jobs and $20 million a year in additional property taxes.
If this is such a good thing, why aren't the communities of Shakopee, Savage, Woodbury, and St. Paul battling Blaine for the rights to host the Vikes?


The Rams Want a New Carpet

The St. Louis Rams want a new playing surface in the dome in St. Louis. What are their options if they don't get it? One is a lawsuit. Here is another option:

As part of the stadium lease deal negotiated between the Rams and St. Louis officials a decade ago, the dome had to remain in the top 25 percent of stadium facilities in the NFL after 10 years - or remain a first-tier facility. If not, the Rams could move the franchise.
Ah, market power at work. Los Angeles has no NFL team, and owners around the country have no qualms in pointing that out to their host cities/lease holders. How long will it be until that stick no longer has the oomph to scare host cities/lease holders into giving teams what they want?


Thursday, February 17, 2005

How Often Does this Happen?

How often does the the coach of a visiting basketball team (or any team) ask a member of the opposing university's student body to come to the visiting team's locker room before a game in order to tell the visitors that they suck? Not very often.

But it happened last night before the Missouri Tigers' game against the Baylor Bears. Those crazy Antlers.


The Grand Canyon of Mars

As usual, today's APOD has an excellent picture of some canyons on Mars.

Let's see Alice from the Brady Bunch make the trek down there on a donkey!


Bang Bang! Shoot 'em Up!

The title to this post is a line from a Tesla tune called "Modern Day Cowboy." It's also appropriate for this Missile Command game.

Link via Heavy Lifting.


Baby Name Wizard

Newmark's Door links to the Baby Name Wizard, a cool online tool to see how many babies are named Suzy, Michael, Beavis, Butthead, or whatever (there's no record of a Beavis or a Butthead). Bertha and Bessie were very popular names back in the early 1900's but, not surprisingly, not popular later in the century. The most popular boy's name in the 1950's thru the 1990's was Michael. That's not surprising.

Where does your name rate? Mine, or some derivative thereof, was sorta popular up until recently.


Pining for the Fjoooooords?

Monty Python is one of my favorite shows of all time. Back in the 70's, when I was a wee lad, one of the naughty things to do would be to watch the Pythons on Sunday might on the local PBS stations. I don't think my mom was too upset about my watching it, but even back then, I realized it was racy.

Life imitates art. John Palmer links to a Toronto Globe and Mail article (third story from the top) about a man who is suing a pet shop for selling him a dying parrot.

An indignant Israeli is suing a pet shop that he says sold him a dying parrot, reports the Ma'ariv newspaper. Itzik Simowitz of the southern city of Beersheba contends the shop cheated him because the Galerita-type cockatoo not only failed to utter a word when he got it home, but was also extremely ill. Mr. Simowitz adds that the shop owner assured him the parrot was not ill but merely needed time to adjust to its new environment.
Maybe the exchange went like this:

(in a Cockney accent)

owner: 'e's resting.

customer: 'e's not resting. e's dead! e's no mo'. e's an ex-parrot.


Wednesday, February 16, 2005

Carl Edwards - Future Daytona 500 Winner?

This weekend is the Daytona 500 - the beginning of the NASCAR season. A former student of mine at Mizzou, Carl Edwards, will be racing the #99 Green Lantern car (how cool is that car?). The Columbia Daily Tribune has a nice write-up on Carl in today's edition. Carl is a real nice guy, and a helluva good driver. He is also, apparently, a practical joker.

While he was teaching the competition a lesson in racing, he was receiving one in human nature. He was routinely booed and accused of cheating after victories.

"I’m so grateful for that experience, but at the time, it was the most miserable thing in the world for me," Edwards said. "My friends and I worked day and night. I spent every dime that we had and more. We’d take the race car down there, and essentially the oldest person on our team was 21 years old. We had a lot of success and won a lot of races. I assumed that when that would happen, you’d earn some respect and everyone would be happy for you, but instead, the opposite happened."

Since they were accused of cheating anyway, Edwards and his crew chief, childhood friend Carl Giacchi, decided to have fun with it.

"They took Styrofoam and cut it and painted it to make it look like a piece of lead. Carl Giacchi would carry it through the pits like it was the heaviest thing he could carry," Sterling said. "They would take it and bolt it onto the frame of the car, so people would think it was adding weight to the car. They would put up a checkered curtain over the back of the rear end and do this stuff, and everybody and their brother wanted to know what Carl Edwards was doing because he would always win. The next race, you’d see people with real lead."

That's ripe. Now I have to find a Carl Edwards hat.


Tuesday, February 15, 2005

Today's Quiz

Here is today's quiz question. What do you call a man who locks all his keys in his filing cabinet?

Answer: Phil


Monday, February 14, 2005

Crazy Week

It's been pretty nuts around these h'yar parts - thus the light blogging. I did find time to post two things over at The Sports Economist on the iminent sale of the Vikings, if you are interested. I don't know how much blogging I'll get to do over the next week. My students take their tests next week, so one or two might actually come to my office hours over the next few days. So I have that to do plus a few other things, so we'll see where I'll find time to blog.

Of course the last time I said that, I rattled off a bunch of posts.

And one last thing, since it's VD Day over here in the states, I better celebrate it by watching "Happy Valentine's Day, Charlie Brown" while sipping a Hazed and Infused or two or three or four or five or six or.... ;-).


Sunday, February 13, 2005

More Reasons to Hate Rebates

Rebates stink. Ralph Frasca of Division of Labour thinks so too. So does his co-blogger Michael Munger. Munger links to a piece by Arnold Kling that is a must read for those who are thinking of buying a computer partly because of a sweet rebate detail. Kling links to this piece by Ed Foster which tells in detail games that are played by those offering rebates.

3 years ago, when I bought the computer on which I am currently typing from that computer maker not named Gateway, one of the reasons I chose it was to get a triple-digit rebate. When I bought it, I wanted to get the best speakers and sound card I could get, but doing so would delay the shipment. I was afraid that the delay might bring my computer to me after the rebate expiration date, but I was told by a customer service rep via email that my rebate would be honored. The shipment arrived after the rebate expiration date. Guess what happened next? Yup... I didn't get my rebate honored. I even sent a copy of that email mentioned above, but no dice. So when I bought my next computer, I treated the rebate notice like I would treat a Kleenex or some Charmin. I based my decision on the non rebate price of the computer and its amenities.

Talk is cheap, and if a rebate sounds too good to be true, it probably is. If you want to buy a new computer, be wary of a big rebate.