Archive forDecember, 2015

Apple Pencils are in short supply, going for $500 on eBay

http://money.cnn.com/2015/11/20/technology/apple-pencil-shortage/index.html

Apple Inc. ‘s new product, Apple pencil is popular among people. However, the supply of the pencils are limited. As the demand is huge and still increasing and the supply didn’t change. The price of Apple pencil went on to $500 on eBay while the price on Apple.com is only $99 but people need to wait for few weeks to get the pencils.

This is the phenomena of shortage in the market. However, it is possible that Apple Inc. made this properly to grab more curiosity from the public.

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UberHop in Toronto- Monopoly or legal, cheap transportation?

Jake Edminston’s article TTC launches legal review to see if Uber’s new shuttle service, uberHOP, infringes on its monopoly in the National Post addresses Uber’s new UberHOP system, which will send SUVs and vans to collect up to six riders and ferry them to the finanial district at $5 a person. This service will be available from 7-10 a.m. and from 4:30-7 p.m., price discriminating the rush hour flow of workers. This incredibly cheap service may be problematic in the face of The City of Toronto Act, which specifically prohibits anyone other than the Toronto Transit Commission from operating a local transport system. TTC lawyers are reviewing the legality of this new service now.

“This expansion of ride the ride-sharing empire comes after aggrevateed taxi drivers staged a major, citywide protest last week, calling on Toronto and provincial lawmakers to regulate Uber.” Edminston reports. However, Toronto Mayor John Tory thinks it would be impractical to shut down the service. Uber Canada spokesperson Susie Heath responded to earlier criticisms, stating that the new project is “an easy way for commuters to share their trips with other commuters and help reduce traffic congestion in our city.” While facing some backlash, it seems inevitable that Uber will continue to expand.

This case example illustrates how a monopoly such as Uber is driving out the Toronto Transportation Commission because of far superior convenience and prices. Normally when businesses compete to become a monopoly, the government may step in to prevent full ownership of a market. However in this instance, a private firm is competing against a public service. This illustrates the majority of the public’s preference for convenient private services that are driven by incentivized growth, rather than a bureaucratically controlled service which often is less efficient.

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Tax on alcohol

http://www.cnn.com/2010/HEALTH/09/24/health.booze.tax/

This article discusses the effect of increasing taxes on alcohol to reducing the deaths, diseases, car crashes and crimes caused by it. Studies have shown that groups that consume alcohol strongly respond even to the slightest alcohol price increase. And even a small decrease in drinking would make a considerable impact to the health of the users and the public. Not only does this support the fact that states should increase tax on alcohol, but also the revenue could be used for multiple purposes, which creates a “win-win for government”.

 

This article goes well with chapter 6 Tax and Subsidies since it discusses the effect of tax on goods.

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Oligopoly in Vietnam

http://english.vietnamnet.vn/fms/business/56715/report-says-oligopoly-exists-in-6-business-fields.html

This article explores some business fields in Vietnam that are under oligopoly, leading to bad competition. 6 oligopoly business fields, detergent, vegetable oil, trucks, insurance, trucks and pay-TV, have the three biggest enterprises “hold more than 65 percent of the market share”. The price control caused by the oligopoly of these businesses will take advantage of their power, leading to unhealthy competition and hurting small business. The dominant of foreign to domestic enterprises is also mentioned in this article.

 

This article goes well with chapter 15 Cartels, Oligopolies, and Monopolistic Competition where Oligopolies and its effects are discussed.

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Gender Pay Gap

http://www.forbes.com/sites/lisaquast/2015/11/22/the-gender-pay-gap-issue-is-fixable-but-may-require-bolder-actions-to-overcome/

This article explores some reasons that contribute to the gender pay gap, which has been a controversial issue for decades. Research have shown that at all level of education, female workers in the U.S. are paid 70-80% of what their counterparts earn. However, the author of this article argues that difference in the average wages should not be viewed as complete gender discrimination by employers. Women are typically paid less than men because of many reasons. One of the factors contributed to the gap is the fact that women choose to work in less lucrative fields compared with men. Higher percentage of men than women choose to work in fields like engineering and computer science which have higher salaries. Women are also more likely to trade advancement in career for families responsibility like raising children, hence accepting lower wages. Though we cannot deny that gender discrimination and gender pay gap still exist, we must look more into the causes of the problem in order to determine the best solution.

This article goes well with chapter 17 Labor Markets where discrimination by employers is discussed.

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Price Controls On Drugs: Short-term Advantage Compared With Long-term Disadvantage

http://www.dailynews.com/opinion/20151116/price-controls-on-drugs-discourage-breakthroughs-guest-commentary

This article discusses the disadvantages of placing price caps in drugs, which expands more on the consequences of price controls introduced in chapter 8 of the book. It takes researchers lots of money and efforts to fully research and develop new drugs that if successfully tested and approved by the FDA, will be made available to consumers. In order to compensate for the high cost of research and development, drugs are set at prices that can climb up to thousands of dollars. However, some consumers cannot afford to buy expensive drugs. A conflict exists between making drugs affordable to patients and creating incentives for more drug research in the future. With a price control on medicine, patients can enjoy the benefits of a fair price. However, this good intention can result in an unintentional consequence: less drug research, which could be more harmful.

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Increasing Imports Of Steel Are Damaging Domestic Steel Industry

From 2012 to 2014, imports of steels from Australia, Brazil, Japan, South Korea, the Netherlands and Turkey increased by 73%. As a consequence, domestic prices are driven down to compete with foreign imports. However, steel price in the US is still around $100 higher than that of Europe and $200 above Asia market. The wave of imports also leads to a decrease in domestic production, which is equivalent to a decline in profit. The devaluation of the yuan also severely impaired the U.S. steel industry (China also exports steels to the U.S.). Steelmakers in the U.S. are of no doubts strongly asking for tariffs on imports of foreign steels. The introduction of tariffs on steels import can greatly improve the situation by allowing for more domestic production of steels. However, tariffs also result in wasted resources and deadweight loss. A study to measure the cost and benefits of tariffs on imported steels should be taken in order to determine the most effective solution to this problem.
This article goes well with chapter 9 since it discusses international trades and tariffs.
http://www.wsj.com/articles/u-s-steelmakers-again-ask-for-tariffs-on-imports-1439326503

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Rent Regulations on New York City Apartments Expire on Monday

This article addresses rent controls and regulations on apartments in New York. As discussed in class, these regulations can be seen as price ceilings on rental housing. These ceilings limit how much landlords can charge for apartments, and therefore are crucial to buyers. This article addresses that they were set to expire a certain day, and lawmakers had no apparent deals or plans to modify or extend the current Rent controls. This situation is crucial as a great majority of people live off of and depend on rental housing in New York, therefore the future of their abilities to live there seemed to be uncertain. The article addresses this in a very alarming statistic that about “one million apartments in New York City are covered by rent regulations”. Legislators were stated to be working on this situation greatly, as there seemed landlords would use what was happening to there advantage at the expense of their tenants and buyers.

http://www.nytimes.com/2015/06/15/nyregion/rent-regulations-on-new-york-city-apartments.html

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AIDS Treatment: physical, mental, and economic benefits all around

http://www.sciencedaily.com/releases/2015/12/151211124258.htm

 

ART, or antiretroviral therapy drugs, became more accessible in rural Malawi in 2008 and have improved the area’s individual and collective lives as well as the economy. Before ART, even HIV-negative people were chronically depressed and unproductive because of the looming fear of death. Everyone knew of someone else with AIDS. This contributed greatly to the economic depression. After ART became more available, corn production rates shot up. Daily cultivation rose 11% and time production improved 16%. Not only do HIV-positive people now have the reassurance that they will not develop full blown AIDS, but their family, friends, and neighbors can feel more secure and contribute more optimistically to their local economy.

I think this is an example of free riding, because even though it has nothing to do with taxes- people are benefitting from a good they are not paying the price of. HIV-negative individuals are enjoying a peace-of-mind now that their neighbors are buying a new AIDS treatment.The local economy is improving for everyone because of the free-riding. In this way, I believe one could argue that HIV-negative people were also forced riders when they had to pay the price of their neighbors being HIV and AIDS ridden.

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Title

[Posted on behalf of John L.]

The following link (http://www.huffingtonpost.com/geoffrey-m-cox-phd/public-vs-private-goods_b_1609599.html) will take you to an article written by the President of Alliant International University. He is going to Hong Kong to recruit students to come to some of the University’s California campuses. In the article he talks about the burden of US education and how expensive it is becoming. He says that education used to be a public good, but now because of the incredible cost it is moving towards a private good.

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