Archive for the ‘Incentives’ Category
Link: http://www.npr.org/blogs/money/2014/10/03/353300404/episode-573-why-textbook-prices-keep-climbing
Summary: Something strange is going on in the textbook market. The price has steeply increased over the past decade–and they’re only getting higher. There is a disconnect between the chooser (the professors) and the buyers (the students). Technically, the professor is the consumer, and they’re spending their students’ money. The podcast offers the opposite: high school textbooks, where costs are kept low because the books are paid for by the schools.
Original Air Date: October 3, 2014
Length: 14 minutes 56 seconds
Discussion Question/ Prompt: Propose a solution to the rising textbook price problem. (Example: a price ceiling? professor awareness of prices? incentives for lower prices?)
Link: http://www.marketplace.org/topics/business/why-ibm-paying-15-billion-lose-business
Summary: IBM has fell 7 percent off its stock price this week. IBM is selling its chip making company to GlobalFoundries for $1.5 billion over the next three years. It would sound unconventional, except when looking to the future. IBM will be receiving chips for the next ten years from GlobalFoundries. Deals like this are exceedingly rare, but IBM has realized truth: it would be more costly to shut down than to sell, and they may be saving money in the end.
Original Air Date: October 20, 2014
Length: 2 minutes 22 seconds
Prompt / Discussion: Discuss how this type of deal differs from collusion.
Link: http://www.marketplace.org/topics/your-money/my-biggest-financial-lesson/david-brancaccio-wants-you-consult-your-future-self
Summary: In this podcast, Brancaccio describes a term called “hyperbolic discounting” in which people look for instant gratification that in turn clouds their financial decisions.
Original Air Date: March 25, 2015
Length: 3 minutes and 58 seconds
Link: http://www.npr.org/blogs/money/2013/09/25/223787129/what-happens-when-a-store-lets-customers-return-whatever-they-want
Summary: This podcast examines the pros and cons to a lenient return policies for businesses and the affect it has on their brand. Some companies see it as a loss of business while others view it as cheap marketing.
Original Air Date: September 25, 2013
Length: 4 minutes 23 seconds
Link: http://www.npr.org/blogs/money/2014/01/24/265396928/when-a-65-cab-ride-costs-192
Summary: This podcast sheds light on supply and demand as well as elasticity using the well know car service Uber.
Original Air Date: January 24, 2014
Length: 4 minutes 9 seconds Note there is a longer version that addresses issues of fairness, rationing by time v. money, different profit maximizing strategies by firms
Discussion Prompt (1) for short or long version: Think about yourself as a consumer of Uber/Lyft services– how elastic is your demand for uber? How do you know? What factors do you think make your demand for an Uber ride more or less elastic? You can think about specific times, or you can think about comparing yourself to other people whose elasticity of demand might be different.
Discussion Prompt (2) for short or long version: This podcast focuses on the topic of ‘surge pricing’: how does this relate to price elasticity of supply? Is the supply of Uber drivers price elastic or inelastic? What factors might impact that?
Discussion Prompt (1) for long version: Planet Money asks this question: If this is how markets generally work (ex. Stock market, copper market), why is what Uber’s doing considered so strange? This podcast is from 2014 (useful to us because it explains Uber in detail because it was new). In the time that has passed, do you think people have come around to this ‘economic way of thinking’ about surge pricing? Why, why not?
Discussion Prompt (2) for long version: The podcast compares the pricing strategy of Home Depot with ‘ice salt/melt,’ where they don’t change the price but they do run out, to the strategy of Uber where they raise the price rather than ‘run out’. Economist Richard Thaler notes that these choices represent different profit maximizing strategies by firms focusing on long-run vs. short-run strategies. What does he mean here? How do these actions represent different profit-maximizing strategies by these firms? Do you think one is ‘more fair’?
Written Prompt: Read this related article: Cohen, P., Hahn, R., Hall, J., Levitt, S., & Metcalfe, R. (2016). Using big data to estimate consumer surplus: The case of uber (No. w22627). National Bureau of Economic Research. Part of what makes this article innovative, is that it provided a ‘real-life’ consumer surplus estimate drawn from actual consumer data. Why do you think that it might have been hard to determine consumer surplus in real life before Uber (and similar apps/services)? Can you make any other links between this article and the podcast?
Link: http://www.npr.org/blogs/money/2015/02/13/386005044/episode-603-a-rose-on-any-other-day
The Planet Money Team investigates the logistics and risks that accompany the iconic Valentine’s Day flower, the rose. Additionally mentioned is cost of shipping and seasonal demand.
Original Air Date: February 13, 2015
Length: 17 minutes 37 seconds
Link: http://www.marketplace.org/topics/economy/special-shopping-day-overload
Summary: The number of shoppers on Black Friday was down this year (2014). Because of the ease in comparing prices online to find the best deal, Black Friday (and the whole weekend) has become a ritual team effort of mothers, daughters, and other relatives.
Original Air Date: December 1, 2014
Length: 1 minute 47 seconds
Discussion Question: Is the economy effecting how many people shop on the Black Friday weekend? Or is it something else that’s driving the number of shoppers down?
Link: http://www.marketplace.org/topics/economy/interstate-tax-break-battle
Summary: The Obama Administration has been cracking down on inversions–where companies avoid US taxes by getting a foreign address. Now, it is being taken down to a state level, as states hand out tax breaks to try to increase business and get out of the Great Recession.
Original Air Date: September 24, 2014
Length: 2 minutes 27 seconds
Link: http://www.marketplace.org/topics/business/made-italy-may-not-mean-what-you-think
Summary: The Country of Origin label is a powerful element on upscale brands. Italians consider it a national economic resource, but the stamp can’t always be believed. US laws say the “last substantial transformation” must be in the country of origin, and tracking manufacturing is difficult at best.
Original Air Date: September 24, 2014
Length: 3 minutes 55 seconds
Link: http://www.marketplace.org/topics/sustainability/boom-and-bust-story-crop-called-guar
Summary: Guar is a small bean, and it had a recent rise and fall in the marketplace. Besides being an additive to thicken many foods, it’s also used in fracking. When fracking took off, the price of guar rose. As the price increased, Texas farmers started growing a lot of it, until Pakistan and India–which grow 98% of the guar combined–caught up to the demand. As a result, oil companies stopped hoarding it, and the prices dropped. The Texas farmers were left without buyers, and caused a chain reaction of bankruptcy.
Original Air Date: October 9, 2014
Length: 2 minutes 47 seconds
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