Books Are Here To Stay

Let's admit it: we've all been forced to read at least one book that we didn't want to. Mine was Of Mice and Men, freshman year. Regardless of what yours was, it has always been strange that, with all the technology being developed in the world, book publishing companies haven't gone out of business. 

As time has gone by, it seems like the need for books has been continuously decreasing. This is a pretty logical guess. The earliest records of writing are clay tablets, which were from 2700-2500 BC. Later on, the first book was printed in China, in 868 AD. In 1440, the printing press was invented, which speeded up the printing process a lot. In my mind, the time period between this and 1833, when the first library opened, was the height for book industries. This seemed to make sense in my head because with the same demand for books, less physical copies would be necessary; the concept of renting books was invented, so I assumed that less people would want to buy them. And now, our latest technology includes features much more interesting (to me) than books. There are millions of games to play, websites to visit, and videos to watch. I had previously thought that the majority of book-buyers were libraries and schools. With this assumption, my guess was that overall, the book industry's revenue was continuously decreasing due to lack of customers. However, I was sorely mistaken.

The current book market size is $25.82 billion. To my surprise, the age group that buys the most books is 18-29 year olds. Additionally, 13-44 year olds buy more books than 45+ year olds. Middle-income women buy the most books, and the most popular genre is romance. 

With younger age groups reading more books, the industry is growing; in fact, it is predicted to reach over $100 billion by 2025. The reason is, just like how written records changed from clay to paper, books are now adapting to online platforms. This does not mean that all books will go online, however. This merely means that the industry is using modern technology to up its sales. For example, did you know that you can sell used books online? Additionally, there are eBooks and audio books for sale the same way that physical books are sold.

Books are one example of how seemingly-old industries take advantage of the modern era to expand its sales. Though this does mean that more freshman are going to have to read Of Mice and Men, it is nice to know that reading required books are a huge part of what is keeping the book industry alive.

Sources:

https://andyrossagency.wordpress.com/tag/first-book-ever-written/

https://newsroom.publishers.org/book-publisher-revenue-estimated-at-258-billion-in-2018/

The Increase in Electric Vehicles

There have noticeably been more and more electric cars in. In fact, electric cars accounted for 13% of new vehicle registrations in California in 2018. The majority have been Tesla’s Model 3, which made up 39% of Bay Area’s new electric vehicles, making us question the good and the bad behind the increase of electric vehicles.

CO2 emission from vehicles has been a huge issue, which has caused the government to create more initiatives to increase the development of electric vehicles. The government has given some $7500 federal tax credit and a $2,500 rebate from California. Pacific Gas and Electric Company (PG&E) has additionally given EV owners an $800 rebate. Clean air vehicles also get the privilege of using the car-pool lane in California, creating an easier commute for many.

Electric car’s range has increased to more than 200 or even 300 miles. Tesla has created a new long-range Model S, which can travel up to 390 miles per charge. With so many miles on a single charge, drivers have been more incentivized to buy a new electric vehicle. While the number of electric vehicles has increased, the number of charging stations has also increased. Chargers have been at a low cost or even free in some cases. Many of these charging stations are near restaurants or malls, so drivers can relax before hitting the road again.

However, while the increase in electric vehicles has been allowing a new hopeful change in commuting, there are also some negative effects. Although electric vehicles have no emission, car batteries release harmful fumes. There has currently been no solution to recycling car batteries, so it has also been contributing to pollution in a different way. In addition, electric vehicles are generally very expensive, with the average cost being at around $55k, compared to the average cost of a car running on gas at around $33k. 

Overall, the increase in options from the car industry has created an increase in electrical vehicles. Although the increase can lessen the amount of CO2 emissions, there are also many problems associated with these vehicles.

Sources:
https://www.moneyunder30.com/true-cost-of-owning-a-car
https://electrek.co/2020/02/19/tesla-110-kwh-battery-pack-400-miles-range/
https://www.marketsandmarkets.com/Market-Reports/electric-vehicle-market-209371461.html
https://www.sfchronicle.com/business/article/Driven-by-Tesla-s-Model-3-electric-car-sales-14001829.php
https://www.bloomberg.com/opinion/articles/2018-08-31/electric-vehicles-in-california-their-day-will-come-suddenly

The Effects of COVID-19 on the Aviation Industry

As the novel coronavirus spreads throughout the world, different industries are being affected. With dozens of countries going into lockdown and quarantine, the aviation industry is one of the most affected industries. On the 5th of March, the International Air Transport Association announced that the estimated impact on aviation from COVID-19 to 63 billion dollars. We can see the impacts on the stock market as well, where airline shares have fallen around 25% since the disease started.

The economic impacts on aviation are the most severe. Worldwide quarantines are causing demand to plunge, leading to lower profits, lower employee wages (perhaps even to mass layoffs). With such a disparity between supply and demand, the entire aviation industry is at risk. A USAToday article by Ray LaHood finds that the damages caused by the coronavirus could very well be worse than the economic damage caused by 9/11. LaHood writes, "At the beginning of this crisis, it appeared as though the airlines would be able to weather the storm, thanks to careful planning and smart decisions meant to cover a future crisis. But government restrictions and widespread guidance to limit travel and social interactions have resulted in a sharp decline in bookings and a significant uptick in cancellations. In fact, multiple countries are considering bans on travel. The European Union is considering a ban on flights into its 27 member countries."

As we see more and more cases of COVID spread throughout the world, it's essential to find a solution to save the many industries that are affected. These negative externalities only spread to other parts of the economy, which is why it's crucial to find new ways to support industries during the coronavirus outbreak.

https://outline.com/v5RYbg
https://www.aa.com.tr/en/latest-on-coronavirus-outbreak/covid-19-impact-on-aviation-was-rapid-report/1779268
https://www.usatoday.com/story/opinion/2020/03/19/coronavirus-crisis-save-aviation-industry-10-million-jobs-column/2870595001/

What should minimum wage really be?

In 2015, Dan Price, the CEO of Seattle-based company Gravity Payments, announced that he would cut his own salary from 1.1 million dollars per year to just seventy-thousand dollars. By doing so, he raised the minimum wage of each of his 120 employees to seventy-thousand dollars as well from an average of $48,000.

Price was instantly swamped with social media attention and simultaneous praise and ridicule for his progressive policy. Attention was quickly garnered around the idea of the pay gaps within the United States. According to some estimates, the US has one of the world's largest pay gaps, with executives earning upwards of 300 times the national average. While some people applauded Price's mindset,

However, something interesting happened following the increase in wages. A productivity jump of 30-40 percent followed the initial raise of salary. Further increases in salaries drove productivity up even more. Researchers Angus Deaton and Daniel Kahneman conducted happiness research based on Price's new pricing policy and found that a person's emotional well-being is healthy when earnings are at an annual $75,000.

This only begs the question, should more companies be raising their minimum wages? In a country with one of the largest pay gaps between low-wage workers and CEO's, we need to find a sustainable balance and tackle issues with the best economic mindset.


https://www.nytimes.com/2015/04/14/business/owner-of-gravity-payments-a-credit-card-processor-is-setting-a-new-minimum-wage-70000-a-year.html
https://www.inc.com/magazine/201511/paul-keegan/does-more-pay-mean-more-growth.html

Celebration Time for Gyms is Approaching

How many times have you gone outside since school got cancelled? A lot of us may be like me, who goes out maybe for 2 hours once every 4 days and spends the rest of the time eating, sleeping, or working. Though these three activities are part of our regular routine, something is missing: exercise.

When it comes to exercise, many of us prefer to go to the gym or jog outside. However, obviously, we are sheltered-in-place. We are highly discouraged to even step outside, so using equipment that other people's sweaty bodies have touched may not be the wisest thing to do at this moment. Without our regular exercising grounds, unless we have that equipment at home, a lot of our regular exercises are eliminated. There are always work-outs we could do at home but they just don't feel the same.

Due to this change, it's predictable that people will want to exercise as soon as this sheltering is over. Bit by bit, people are going to start slowly returning to the gym. Unless researchers come up with a cure for corona, at first, people will be reluctant to return to the gym so quickly because of fear of the virus. After a while, as our days start to go back to normal with returning work/school and as more stores open, the priority of physical fitness will increase within us. Many of us will start hitting the gym again, and perhaps people who hadn't had memberships before will buy one. The demand for memberships will go up, and prices may as well if gyms see this as an opportunity to make money. After all, less exercise for us also means that gyms are struggling to make money. This will be their point of return.

One way we can avoid getting caught up in this chaos is by taking care of our bodies right now. Even if we can't jog outside or lift, there is plenty we can do at home. This way, we will benefit not only physically, but economically as well.

PG&E: The impact of the wildfires.

 In the last few years, PG&E has been under scrutiny for the damages it has cost Northern California residents and the environment due to pipeline explosions and forest fires. Due to the lawsuits following the wildfires in 2017 and 2018, PG&E has filed for Chapter 11 bankruptcy. 

When the wildfires began, PG&E’s annual revenue was $17.135 billion with a 3.01% decrease before the wildfires. The next year, their annual revenue decreased by 2.9%, coming out with $16,759 billion. 

During the time, many residents were angered that their electricity was cut to prevent wildfires and some estimated that it would cost California’s economy $2 billion due to commercial and industrial losses. These estimates are derived from the hours of electricity consumers use in kilowatts and the economic value that was lost due to the shortage. 

However, since government regulators determine the prices of electricity and PG&E is the only company with the infrastructure to supply electricity for their region, PG&E has the incentive to improve the efficiency of their production to make electricity cheaper for consumers since regulators will set the price to cover costs, no matter what those costs are. In addition, the government has imposed this monopoly that makes it illegal for other companies to try to get PG&E’s consumers. 

Overall, PG&E faces $30 billion in liability costs, and the court will decide what will happen since they are unable to pay even with insurance and assets combined. PG&E will now have by June 30, 2020, to accomplish its plan of emerging from its bankruptcy. 

As of Monday, PG&E has pled guilty to involuntary manslaughter for more than 80 lives lost in Camp Fire. 

Sources:

https://www.cnbc.com/2019/10/10/pge-power-outage-could-cost-the-california-economy-more-than-2-billion.html

https://en.wikipedia.org/wiki/Pacific_Gas_and_Electric_Company

https://www.nytimes.com/2019/01/14/business/energy-environment/pge-bankruptcy-california.html

Corona Causes Global Condom Shortage

https://www.theguardian.com/world/2020/mar/28/coronavirus-symptoms-what-are-they-and-should-i-call-the-doctor

It's not because more people are staying at home. Karex Bhd, the world's largest condom manufacturer, has stopped producing condoms post the covid-19.

Responsible for one-fifth of the world's total condom production, Karex Bhd had to shut down its main manufacturing plant after the Malaysian government-imposed restrictions on businesses. The factory was reopened on Friday after the government deemed the factory exempt from local restrictions. However, the factory will only run at half capacity.

As more and more industries continue to be affected by covid-19, governments continue to make exceptions for certain businesses post lockdown. For example, in Mountain View, the El Camino Baskin Robbins continues to operate despite a shelter in place order by the Santa Clara County government.

Should the government impose harsher restrictions on these organizations, or should government's be providing stipends to industries currently being affected by the virus? The Trump organization just passed a bill that will allocate 2.2 trillion dollars to assist businesses that have been affected by the coronavirus. The Coronavirus Aid, Relief, and Economic Security Act aims to provide stipends to both businesses and individuals who have been affected by the virus.

Should Malaysia do the same to prevent a global condom shortage? I'm not sure. However, as more and more countries continue to pass relief acts, perhaps Malaysia will do the same.

Sources

https://techcrunch.com/2020/03/27/cares-act-stimulus-package-covid-19/

https://nypost.com/2020/03/28/condom-shortage-looms-as-coronavirus-shuts-down-production/

The Microeconomic Legacy of COVID-19

Here we are in the middle of a health crisis so dire we are calling it a pandemic. Businesses are closed, government is at a standstill, and schools are experimenting with remote learning. While hospital beds are filling and ICU’s are at maximum capacity, what are the economic repercussions? We are hearing about small businesses going bankrupt, renters unable to pay their bills, and massive unemployment. It is difficult to imagine any positive outcomes while in the midst of such a global crisis.

If we look back through history, we see there have been some beneficial results from similar health crises. Online shopping will surely feel a surge of orders, distance learning has included online AP review sessions with concentrated efforts to improve learning, and modern technology has enabled humans to remain in touch while observing social distancing. What advances could be made under this stressful situation? Other than public health improvements, what else could be enhanced? Information sharing, coordinated efforts to reduce germ sharing, smartphone apps to help avoid future crises, the sky is the limit. All of these improvements are reflected by growth in creative solutions.

All of these upgrades improve household quality of life which in turn boosts local, regional, and global economies. Small improvements at the family and household level build upon each other creating impressive boosts to the economy as a whole. We are all connected after all.

Sources:
https://hbr.org/2020/03/what-coronavirus-could-mean-for-the-global-economy
https://www.dukehealth.org/covid-19-update/resources

How is Zoom Doing?

While many businesses are being forced to shut down because of the coronavirus outbreak, some businesses are particularly thriving. Companies such as Amazon, Target, and other chain superstores are thriving as many smaller stores are being forced out of business. However, as I was watching my daily Zoom lecture from my math professor, I couldn't help but wonder: how are Zoom stocks doing amidst the covid-19 outbreak?

Extraordinarily well. The stock is up 7.47 percent as of March 27, 2020, which is pretty huge. Zoom's stock value has more than doubled since the beginning of 2020, and part of that doubling can certainly be attributed to the covid-19 outbreak. The demand for video calling has surged very recently, and with Zoom lifting time restrictions and restrictions on groups over 40 people for schools and other businesses, they are gaining quite a large userbase. Some universities are now affectionately calling themselves "zoom universities," i.e. UCLA's UZLA renaming.

However, as with all highs comes a low. Is Zoom a safe choice for investors long-term? Probably not. The video-calling industry is estimated to be worth 6 billion. Zoom, however, is estimating itself to be worth 40 billion right now. This overinflation may make Zoom due for a market crash given time, making it not a safe choice for the long term investor.

However, while it can take advantage of the covid-19 outbreak, Zoom continues to do so. Perhaps Zoom will have a loyal, dedicated userbase after the end of the outbreak. It seems like that may be the case. We won't know until this is all over though. We'll see when it ends.

Source

https://www.fool.com/investing/2020/03/26/theres-a-big-problem-with-zoom-stock.aspx

Opportunity Cost Played Out

College acceptance season is here! Coronavirus or not, colleges are passing out acceptance letters and denials. For those students choosing not to partake in the craziness of being judged based on a single essay and the sum of your GPA, SAT, ACT, AP, SAT Subject Tests, and course rigor, besides enjoying an inner calm during senior year, what are those students giving up?

You hear the term opportunity cost tossed around when choosing whether or not to purchase a vacation home or when choosing whether to go on vacation or pay down a debt. Opportunity cost is applicable in any situation that involves a choice with a common unit of measure, either monetary or time. We make choices all of the time.

Let’s look at the opportunity cost of going to college versus getting a job after graduating from high school. Lots of comparisons include room and board, but housing and food are necessities regardless if you live on a college campus or commuting to a job. There is the obvious expense of tuition and course books when choosing a college degree, but what about time? Students who spend time on school projects forego the opportunity to secure a job, income, and make progress toward financial independence.

However, we all know choices are individual and include immeasurable factors, not the least of which is emotion.

Sources:
https://www.accountingtools.com/articles/what-is-opportunity-cost.html
https://college.compareer.com/opportunity-cost-attending-college/

Why CollegeBoard is Here to Stay

Why CollegeBoard is Here to Stay It’s a favorite pastime of students, teachers, and anyone who’s taken an SAT to complain about CollegeBoard. Many see large prices*, strict rules, and purported general incompetence as a result of their monopoly over standardized testing. While it’s undeniable that CollegeBoard is a monopoly, it’s difficult to imagine an alternative. College putting out individual placement tests would require duplicate work, from students and administrators. Having multiple test providers creates more work for students, who must choose which to take, tutors, who must expand their curriculum, and college admissions offices, which must convert between test scores to compare students. The standardized test industry will inevitably create an effective monopoly--standardized tests are only useful when they’re truly standard, i.e. there’s only one of them. This fact was built into CollegeBoard’s original mission in 1899: multiple colleges collaborating to create a single set of standards for and measurements of secondary school education. Our class discussions have covered natural monopolies, situations in which the best prices are offered to consumers when only one firm is producing a product, due to the behavior of economies of scale. Most examples, however, focus on the economics of supply. Economies of scale affect the cost of production, and thus the lowest cost that can be offered to consumers. I think of these as “supply-side natural monopolies,” natural monopolies that arise from the economics of supply that then dictate cost. But in the modern era, direct cost is rarely what matters the most. CollegeBoard is the perfect example. Its utility stems not from the prices it offers or even the quality of the product. Its utility is the fact that it’s a monopoly. The more a single standardized testing firm dominates the market, the greater its value proposition to consumers. Imagine each of the 10 colleges I apply to has its own $30 test. The single SAT then provides a $300 value in 1/10 the time, for only $65. If only 80% of colleges accept the test, the value drops to $240. More important than the cost of the product is how many institutions the product can interoperate with. In short, I’ll pay more for a standardized test the greater the number of colleges that accept it. Similarly, colleges will only accept standardized tests that have a large number of students taking them. CollegeBoard’s product becomes better the more ubiquitous it is. This is an instance of demand-side economies of scale, also popularly called “network effects”--the value of a product scaling with the number of people using it. When an industry has large network effects, it leads to a “demand-side natural monopoly.” In the information era, anti-trust discussions are focused mostly on demand-side monopolies. Google’s search engine is miles ahead of others in part because they collect data on the usage patterns of billions of users, and use that information to enhance their product, and the value of Google Ads also derives from this search information. More explicitly, the value of Facebook, Twitter, Instagram, and all social media companies aren’t in the products themselves. An average developer could clone one of these products in about a month. Their value derives from the network they provide consumers and advertisers access to. Even though NoCensorshipTwitterCloneCompany#725 offers the same product as Twitter, without a feed full of tweets to read and potential followers to gather, the product is worthless.

Network effects are part of the reason why tech antitrust is such a challenge. While there are externalities to having a single player in the video hosting industry (Google/Youtube) or giving a company control over politician’s speech (Twitter), splitting these companies up to restore competition destroys the very thing it seeks to protect. In short, complain all you want about CollegeBoard, nothing will change. And if it does, have fun paying for your kid’s 15 college entrance tests.

*if you examine all the work that goes into designing curriculum, designing tests, logistics, and grading, I don’t think the cost of an AP test is outrageous.

"Piracy"

During the napster documentary, one of the main questions was, "is using napster piracy?" I think we all agreed that the answer was yes, but given our own involvement with that kind of thing, no one wanted to admit it. While napster was before our time, and none of us fully use it, we still use similar things. From soap2day, to 123movies, to swapping Netflix free trials with new emails,  we are preform some kind of piracy.
The real question, as we know the answer to, are we pirates, which is yes, is, is it a bad thing to use these sites. The question has no correct answer, but I would be happy to hear what you guys think about it. On one side, it is a problem as we are for free, viewing material that someone put time and effort into creating, in the hope of getting paid, and we are taking money out of the equation, so we are forcing people to work for free. On the other side, many of these content creates get most of their money, not from the individuals watching, but the operations getting involved, so how much of an effect do we have by not paying.
This question was many other answers, and I am wondering about your opinions on this.

https://www.forbes.com/sites/hughmcintyre/2018/03/21/what-happened-to-the-piracy-sites-that-nearly-destroyed-the-music-industry-part-1-napster/#58e947f72293
(and the documentary)

Small Business

With the virus hitting as hard as it can right now, there are many economic impacts that I am sure we have all talked about at some point. What I am going to talk about today is the effects on small, family shops. Many stores function on a sort of "paycheck to paycheck" style of business, where the total revenue is barley greater than the implicit and explicit costs combined. With the current epidemic, places are closing, getting no revenue, while also spending very little to nothing to keep the place able to re open.
In this time, stores now have no revenue, as they are closed, and no explicit costs as, well, they are closed. But the explicit costs still remain, where they have to pay rent, taxes, and buy things that they need for their own homes. So they will have a smaller expenses burning away at what they have saved up, which could be a lot, so they will reopen, but they also might not have much, and there is a good change that many stores wont open up again.

https://www.forbes.com/sites/danestangler/2020/03/17/how-do-we-help-small-business-during-covid-19-crisis/#692bbdf61b7d

Knockoff Girl Scout Cookies

        I was in girl scouts for nine years, and there was nothing that irritated me more than the knockoff cookies you could buy in the store.  At Safeway, for example, you can buy numerous alternatives that are just honestly not as good for multiple reasons, like Keebler Coconut Dreams and Keebler Grasshoppers.  But why would you buy those when you could wait and support young girls and eat better cookies?
       The demand for girl scout cookies is pretty high year-round but obviously spikes during cookie season, which starts in February.  But they're only available during this time, which forces consumers to find worse alternatives if they want one during, say, the summer.  So what's the harm in buying knockoff generic cookies?
       It may decrease the demand for cookies in February, which means less money for girls.  The whole point of this program is to earn money for the troops so they can go on things like service and field trips, as well as fund things like their bronze awards (a community service project requiring 20 hours of at-home work).  However, the act of selling also teaches young girls leadership, marketing, customer service, and other invaluable experiences that they may not be taught at school.
      And if you need another reason to support local troops, name-brand cookies honestly taste better.  And, if you need them year-round, they last a really long time in the freezer and are pretty good cold.  Support your local girl scouts!

Is Perfect Competition Perfect?

Has the internet created perfectly competitive markets? Think of eBay, does that software meet the requirements to allow for perfect competition? Certainly large numbers of sellers can reach their buyers online. And entry is simple, all you need to create a listing is a picture, description, and an eBay account and you are off selling.

The consumers are able to easily compare your product with hundreds of other similar ones. You can actually see the price being set with the auctions online. No one individual is able to influence the market price, it is set by supply and demand. Everyone has access to perfect information and can compare products and pricing. This certainly meets the requirements of perfect competition.

But what about profit? In the perfect competition scenario, marginal revenue is equal to marginal cost. In the long run, a perfectly competitive firm’s profits are always equal to zero since profits will continue to allow entry into the market, which will drive price down, which in turn will reduce profits until there are no more to be had.

So, is the internet a completely competitive market? Not quite, but it is the closest example we have in today’s world. Popular examples include agriculture and the stock market. Can you think of another industry that meets all of the requirements of perfect competition?

Sources:
https://monicavendituoli.wordpress.com/the-internet-as-perfectly-competitive-market-and-how-that-affects-consumer-loyalty/
https://monicavendituoli.wordpress.com/conclusion-a-higher-value-placed-on-customer-loyalty/
https://www.selfgrowth.com/articles/internet-a-market-with-perfect-competition

The Monopolistic Competition of: Cheap Chinese Products?

We learned examples of monopolistic competition from class: Big Mac vs Whopper vs Double Double, Coke vs Pepsi vs generic brand. Something that you might not have considered to be monopolistic competition is the cheap Chinese market.

When I was looking for a new keyboard, I watched a review that noticed something odd about keyboards made by 4 different companies. The DB Power, Rii, Mafiti, and Bluedragon keyboards were not only similar, but exactly the same. They were produced in the same Chinese factory, share the same design defects, and cost around $20 dollars. The only thing that separates them are the small nuances. One comes with a higher quality cable, another with a longer warranty, yet another with more lighting options, and finally one that comes with a extremely poorly made mouse. These companies aren't trying to differentiate themselves with price: because their products are made in the same factory, their prices are all going to be similar. As a result, they need to entice potential consumers with unique features.

See the similarities with the more traditional examples? Just like how the Big Mac, Whopper, and Double Double are made of the same base ingredients of beef, flour, and various toppings applied in different ways, these brands also try to take the same cheap keyboard and add their own flair on it. Just like how some companies like Coke and Pepsi have managed to draw people into exclusively buying their product, some of these companies have also built up a reputation. Anker differentiated itself by providing above average customer service (offering a lifetime warranty for their products), thus, they capitalize on their reputation by charging a higher price for their products than the other brands(and to offset some of the cost of providing that lifetime warranty).

It's interesting to see the concepts we learnt in class being applied to an unexpected portion of the market and how each of the 4 companies try so hard to differentiate themselves from each other, despite the fact that they are selling what is essentially the same product.



Source:
https://www.youtube.com/watch?v=2i1PdfaAKFA

Who controls the price of goods?

Have you ever wondered how producers determine markup and price? Well, for comparable products, it turns out that you, the consumer, has some influence.

If two similar goods are available, the demand for product A decreases as A’s price increases (A’s price elasticity of demand) and B’s price decreases (the cross price elasticity of demand for product A relative to price of product B).

Price elasticity of demand reflects consumer preferences and substitutability among products.

For example, how do you choose which cereal to buy when faced with the endless wall of options at the grocery store? Your preferences help determine pricing when it comes to easily substitutable products. There are literally hundreds of cereal options but most likely only a few differentiating factors. So the characteristics that help consumers decide can be boiled down to a manageable few and compared.

As with cereals, the automotive industry offers consumers many options with comparatively minor differentiators. Are you in the market for a large SUV, a small sedan, or somewhere in between? Once you have settled on the size of the vehicle, your options are relatively narrow. Choosing one car brand over another helps drive pricing.

Can you think of another market with many choices separated by a relatively few set of differences?

Your choices dictate markup and price for a particular good. So next time you are in the grocery store trying to decide between Fruit Loops and Lucky Charms, know that your decision has an impact on how much the producer can charge for that particular type of cereal. You are flexing your price setting power.

Sources:
https://theincidentaleconomist.com/wordpress/what-is-the-source-of-price-setting-power/
https://www.cheatsheet.com/money-career/youll-never-guess-americas-favorite-breakfast-cereal.html/

Server Uptime

Anyone who was using discord(Skype but better) over the past few days will remember that great crash that let to everyone using, oh no, phones and in game chat. This crash, while not unique, was caused by a common thing in this day and age, overcrowded servers. Compared to the last issue of overcrowded servers we all went though, about a year ago, Pokemon Go, this is the polar opposite. Instead of everyone being out trying to max out their squad, people are stuck in trying to hold on to any semblance of communication we can get. Everyone being online and interconnected causing massive demands for some companies, discord, zoom, twitch, and anything that runs an online game. The people who work these servers, and keep them up are in a stuck situation where there is work that needs to be done, but cannot, as they must stay home. This has resulted in many "jury rigged" solutions that will soon crash, but hopefully will work for at least the next bit. While companies that provide online connection sources are in a prime position to seize the open market, it is also a huge burden for them to carry, and many will not be able to shoulder it.

Human Nature

As said by Agent K(Tommy Lee Jones, Men in Black), "A person is smart, people, are dumb".  This quote is very relevant to today's world, as with the pandemic going around, a person can be smart but as a whole, we, a people, are very, very dumb. Economics and theories can very intelligently predict what a ration person will do in a high demand low supply situation such as a lock down, as, you know, economists are smart. But these predictions will soon fall apart as soon as the people get involved.
For example, a rational person will predict that when a national pandemic occurs, people will buy masks, long term food, water, and other cleaning supplies, which, to their credit, we did, but what was unexpected was toilet paper. All it takes for a people to become dumb, is for one outlier to become dumb, and be observed doing so. One person sees the headlines "self quarantine to be put in place", and has the incredibly rational idea to run to Costco, and buy several carts full of toilet paper, "just in case", a person in line behind them sees this tomfoolery, and has the equally rational idea of "oh man, I need 16 packs of Charmin Ultrasoft", and there goes the rest of the stock. With the stock gone, people notices the big empty spot in the shelves, and check to see what was there "Oh toilet paper, I need some of that", and before you know it, we are where we are, with people being dumb.

https://www.easttexasmatters.com/health/coronavirus/why-the-rush-on-toilet-paper-one-economist-believes-he-knows/

Universal Pictures' Current Reality

As our county has gone on lockdown, and many other have followed, there has been an increasing panic and worry about the state of the economy. Some businesses are hopeless as they rely on the influx of customers they would normally get, but others are attempting to adapt to our new reality by shifting their distribution models. One of these companies is Universal Pictures.

As I sit in bed everyday or sometimes move to the couch, one part of my routine stays fairly consistent: I rely on movies to help pass the time. I am a pretty avid movie/ television show watcher, meaning that I have seen most of the things that would interest me on Netflix and Hulu. I went to the library before it closed and snatched a couple DVDs, but have finished them all; so I was interested to hear about Universal's new plea.

As people are unable to leave their homes, or unwilling to sit in a movie theatre packed with strangers, Universal has given them another option: stream new movies from within their house. For $19.99, consumers are able to rent new movies like "Invisible Man," "Emma," "The Hunt," and more. They are offered on a variety of platforms, such as Amazon Prime, Comcast, and iTunes.

By completely uprooting the idea/ concept of a picture movie, Universal is showing how desperate they are. Their average total costs are seemingly falling way below the demand. A feature film typically has a budge of ~$100 million - with having to pay famous actors, directors, props, and everything else that goes into a movie, it gets expensive. But with movies coming out amidst of the corona virus panic or a week before, this budge is unredeemable.

They are even upping the typical price in order to make up for their losses. An average movie theatre ticket (not here in Silicon Valley, but) in the US is about $9. They are charging consumers about $20 to rent their movies for a 48 hour time period...

I am unsure about this. To me, it seems a bit overpriced. I would usually only go to the movie theatre for the experience; I like to go with my friends, buy snacks, and sit on the reclining (sometimes even heated) chairs. Even then, I find the $15 ticket a bit expensive - and I like movies, a lot. Due to the extreme prices of snacks and the ticket, I often wait for the movies to be released on Amazon Prime or Netflix or even my library in order to indulge in them - to me the utility per dollar is not worth it. Do you think Universal will be able to raise their demand and revenue to cover their average total cost of producing the movies - or is inevitably lost to the shelter in place and corona virus?

Sources:
https://parlaystudios.com/blog/feature-film-budget-breakdown/

https://qz.com/1819462/universal-is-releasing-its-current-movies-online-because-of-coronavirus/

Economics Cannot Explain Irrationality

 

When a disease such as the Coronavirus hits, you would expect that there might be a greater demand for hand sanitizer, face masks, and cleaning supplies. However, the following clearing out of shelves for not only these items, but dried goods, bottled water, and, most shocking of all, toilet paper.

The recent panic is a classic example of how economics can't explain human behavior. While people are conditioned to buy canned and dried goods to prepare for natural disasters, pandemics do not affect supply chains to the same extent. However incompetent government leaders might be, transportation and food production is the one thing that will still be allowed during times of crisis. With the governmental price ceiling to prevent price gouging, it's natural to have a shortage of hand sanitizers and masks.

 The one thing that economics can't explain is the frenzy for toilet paper. Diarrhea is not one of the major symptoms of the Coronavirus, yet people are buying up entire store's worth fearing that they might not be able to get any in the future. Theoretically, the demand curve for Toilet Paper should not shift at all, but economics can't explain irrationality.

P.S. Bidets exist

Economic Impacts of Corona - Stock Market Crash

https://www.nps.gov/aboutus/news/public-health-update.htm

Post COVID-19, the global stock market crashed. The Dow Jones industrial, which measures an average stock value between twenty transport stocks and serves as a proxy for the United States stock market, fell 6.4 percent in just one day, and oil prices deflated 24 percent what they were currently. This doesn't serve as a surprise; coronavirus has instigated mass fears globally, and we've seen the situations it can cause, such as Italy last week.

Interestingly enough, Americans say they are refusing to buy Corona beer out of association with the virus, but beer sales are up 5% overall according to Barrons. Although this seems counter-intuitive, the increase in sales could be due to some Americans stock buying out of fear of the virus. Although certain Americans could be limiting their consumption of the beer, others may be buying more out of hoarding measures, showing that data does not always mean what one would assume it does.

Other economic impacts include some families no longer having a stable income to rely on, and in the case of California, a widespread economic shutdown as non-essential stores stop operating. No longer is money flowing through luxury aspects of the economy. People are still buying products that are inelastic, such as food and electricity.

It is predicted that school will be shut down until the summer by California's current state governer. I wonder what other economic implications will be in the months to come.


Sources:

https://www.investopedia.com/terms/d/djia.asp
https://www.washingtonpost.com/business/2020/03/18/markets-economy-live-updates-coronavirus/
https://www.barrons.com/articles/americans-say-they-wont-drink-corona-because-of-coronavirus-but-sales-are-up-5-51583610529

Monopolising Hand Sanitizers (Or Not)

Walgreens: sold out. CVS: sold out. Amazon: overpriced or out of stock.

As you might have heard, eBay recently banned the sales of face masks, hand sanitizers, and disinfectant wipes because of the ridiculous pricing. Ever since COVID-19 took on its first victim in the United States, people have become increasingly sensitive to hygiene. Here are the effects.

What is the easiest, most convenient way to maintain hygiene? Hand sanitizers. Previously underrated, in my opinion, the focus on these products have increased exponentially. The demand multiplies every single day, while the rate of supply remains fairly consistant. After all, how can companies increase their production rates that quickly? As people scramble to get a bottle, those who have more hand sanitizers than they need see an opportunity to make some quick money. They enlisted their extra bottles for extremely high prices. For example, a 3-pack of 1-ounce Purell hand sanitizers, like the one depicted above, would usually be around $8. On eBay and Amazon, however, they were sold for $59. 

This seems like a monopolised business: the third-party sellers with the $59 hand sanitizer are the suppliers, and the ones surfing the internet and buying those products are the consumers. The suppliers can raise the price to whatever they want to because the demand is unchanging for now. The difference between traditional monopoly and the case of hand sanitizers is the number of suppliers. In a normal monopoly, there may be a single large enterprise that is controlling the price. However, in this case, there are numerous parties working towards the same goal. 

The challenge for them is to make as much money as the can, without having it be too much. The price that they sell at needs to be one that is slightly lower than the others in order to attract customers, but also one that makes a substantial amount of money. 

Fortunately eBay has shut down the selling of these temporarily popular items. Do you think that it was a fair choice, or is it taking away free market?


Sources:
https://www.entrepreneur.com/article/347346

Game Theory of Toilet Paper

Over the last few days, the status of coronavirus has changed rapidly. Santa Clara County, along with many others, has declared a “shelter in place” order. People are now flocking supermarkets and trying to stock up on supplies as soon as possible. Because everyone is buying more than their usual amount, the store shelves are emptying at an alarmingly fast rate and show no signs of stopping as lines grow longer and longer. Although most news sources and the government say that hoarding is bad, why do people continue to do so?

Everyone, whether they know it or not, is following some basic rules of game theory. During this time, the dominant strategy (best strategy regardless of what others do) is to get the food, supplies, and medicine you need to survive. However, when one person starts to buy much more than they need, other people also have to start changing their tactics. This demonstrates Nash Equilibrium (when one chooses the best strategy if other’s strategies are unchanged) since other people are going to start stockpiling no matter what, the best strategy for the other people is to do the same or lose all their resources to others.

Although it seems extreme, most people view the world as a zero sum game where whatever is gained by one party must be lost by another and no one wants to be on the losing side. Knowing this, can we truly blame those individuals that are hoarding? Or is this something that is fundamentally ingrained in our individualistic society that needs to be changed?

https://www.scmp.com/news/world/united-states-canada/article/3075480/coronavirus-panic-buying-psychology-behind-toilet

https://sm.mashable.com/mashable_sea/photo/default/singapore-panic-buying-cover_fp2p.png 

Free Market to Oligopoly - How can America reverse the trend?

Has the US gone from free market trade to Oligopoly? Industries that once offered many choices have merged, reducing competition and increasing costs for Americans. Do you remember TWA, Northwest, or Continental airlines? They were bought by American, Delta, and United respectively, reducing the choice of air travel by half and giving the three remaining giants control over pricing.

Airlines are not the only industry ruled by the few. Mobile phone plans, internet services, social media, pharmaceutical companies and the entertainment business all are examples of market sectors controlled by a few large leaders.

How do we re-introduce fair trade in the US? With large corporations blocking market entry by acquisitions, regulatory lobbying, and generous campaign donations, the hurdle may be too high. By allowing these barriers to exist, are we stifling innovation?

Ironically, as US businesses have become more monopolistic, Europe has taken over the free market model. Government regulations have opened doors for less expensive competitors to enter existing markets in Europe. The beneficiaries of the competition are the European consumers. It is estimated that oligopolies in America cost the average family $300 a month. The country who once blazed the path for free trade is now eating the dust of large market dominating corporations. How will we re-introduce a competitive mindset policy for American trade? Perhaps, we should look to Europe for answers.

Sources:
https://www.theguardian.com/commentisfree/2019/nov/13/america-was-once-the-land-of-free-markets-now-theyre-becoming-a-myth
https://www.investopedia.com/ask/answers/121514/what-are-major-differences-between-monopoly-and-oligopoly.asphttps://www.cosboa.org.au/post/2016/08/09/thoughts-on-oligopolies
https://www.cosboa.org.au/post/2016/08/09/thoughts-on-oligopolies

Game Theory in Real Life Applications

Did you know that Great Britain’s departure from the European Union could be predicted by the same strategies you use in a game of chess? In fact, Brexit was inevitable according to game theory. The European Union sees the largest value in punishing Great Britain for leaving as an example to discourage other countries from following suit, even though that is not in the EU’s best interest.

Game theory, also known as the prisoner’s dilemma, is used to explain decisions in anything that involves a strategy and multiple players. Applications range from social and biological sciences to corporate business decisions and even new car sales prices. Any time two or more people have to make decisions that have consequences, game theory can be applied to explain their choices.

Let’s take the classic example, two people are arrested and are in solitary confinement. The prosecutors have enough evidence to convict them both, but not enough to identify the ring leader. Each prisoner has two choices: betray the other, or remain silent. The outcomes can be classified in a matrix as follows: they each betray each other and serve 2 years; one betrays while the other remains silent resulting in the betrayer set free and the accused serving 3 years; or both remain silent and each serve 1 year. Since betrayal has the highest reward, being set free, that is the dominant strategy.

This logic can be applied to climate change discussions. Although all countries would benefit from a stable climate, one country is hesitant to reduce carbon emissions. The perceived benefit with no change in behavior to one country is incorrectly assumed to be greater than if all countries’ behavior were changed. And hence, the impasse.

Game theory can be used to explain why two completely rational humans would not cooperate even if it is in their best interest to do so. What in your life can be explained by game theory?

Sources:
https://towardsdatascience.com/game-theory-101-for-dummies-like-me-2e9ab92749d4
https://www.scientificamerican.com/article/what-is-game-theory-and-w/
https://en.wikipedia.org/wiki/Prisoner%27s_dilemma
https://iea.org.uk/can-game-theory-help-to-explain-the-uks-current-brexit-difficulties/
https://www.investopedia.com/terms/g/gametheory.ap

Changes In Marketing

As is the common theme right now, the corona virus has had major and far reaching effects on the economy. With many sports being canceled, including our own here at Los Altos, as well as, more importantly, professional sports, many things are going to change. The obvious economic impacts of these cancellations are that there is much less money going in and coming out of profession sports leagues, with no tickets being sold, and no support staff to pay as much. But there are more impacts. With no game being played, there are no games to be watched on Tv, leading to no ads, and a lot of disruption.
Many people watching professional sports a lot, on average a person will watch almost 4 hours a week of sports, that's a huge amount of time. With all of this time being removed, and with very little to take its place many marketing departments are going to be thrown into chaos.
Just advertising for sports costs around 400 million dollars a year, and that's just the ads for the actual games. The adds ran during the game cost fortunes more. These cost of these adds are 37% of the total cost on TV advertising, more than a third. With all this money not being spent on adds for these games, as there are no games, marketing departments are going to have a lot of money free, and almost nowhere to put it.

https://www.statista.com/statistics/288902/hours-spent-per-week-consuming-sports-in-the-us-by-method/
https://www.statista.com/statistics/470562/sporting-and-athletic-goods-industry-ad-spend-usa/
https://adage.com/article/media/sports-account-37-percent-all-tv-ad-dollars/300310

Veggie Burgers - The New Phenomenon

Ah veggie burgers. They are becoming increasingly popular and available for vegetarian and vegans. They are typically made up of legumes, mushrooms, grains, and nuts, shredded and packed together to replicate a patty. For vegetarian and vegan people, finding food options - like veggie burgers - were difficult. Restaurants' menus had barely anything that they could eat. Once in a while, or at special vegetarian/vegan serving restaurants, they would find something they could eat. However, times are changing; more restaurants are introducing their own version of a veggie burger.

Here are a couple I found:

Burger King: "Impossible Whopper"

Carl's Jr.: Beyond Burger

Dunkin': Breakfast burger

Fatburger: "Impossible Fatburger"

Red Robin: "Impossible Cheeseburger"
(omit the cheese to make it vegan)

Subway: "Beyond Meatball Marinara"
(it is close -- their version of a burger)

White Castle: "Impossible Sliders"

McDonald's: Non-meat Big Vegan Burger
(only being served in places like Germany )

As I was researching restaurants and their options, I came across many more than I had expected. Restaurants who were well known, seemingly had veggie burgers that I had never heard of. That indicated to me that these restaurants need to invest more money in advertising these products. A lot of the restaurants are not near us, e.g. White Castle, but I still haven't seen advertisements for Subway's "Beyond Meatball Marinara" -- so that is no excuse. If about 8% of the population identifies as either vegan or vegetarian, these companies are losing a lot of customers. Since these companies are engaging in monopolistic competition for their veggie burgers/ meal, the ways in which they advertise are extremely important. Even though I am not vegetarian or vegan, the only veggie burger I have ever heard of comes from Wahlburger's - which I did not even include on this list. It seems as if companies like Wahlburger's are creaming the competition in this matter. Which company have you seen advertise their burger the most?


Sources:

https://247wallst.com/special-report/2019/10/03/there-are-18-fast-food-restaurants-serving-vegan-burgers/6/

https://veganbits.com/vegan-demographics/

Is right now the perfect time for a vacation?

As the Corona Virus reaches more people, states, and countries, less people are willing to risk traveling. Airports pose the threat of germs all over the place. Additionally, sitting on an airplane means being within the proximity of a stranger who could have possibly anything. It is a big risk especially for the elderly members of society or those with preexisting diseases (especially those pertaining to the lungs). 

However, millennials see it differently. With many of their college classes being cancelled, moved online, or as they get to take an early "spring break," they see it as advantageous. Since the demand for planes is relatively elastic, it can be demonstrated here that as the price ( of the flights) decrease the total quantity demanded increases. Airlines are offering flights at an extremely cheap rate, as they are essentially begging consumers to buy their tickets. Air travel is projecting to lose up to a whopping $113 billion due to the reduced demand of flights brought on by the virus.

Millennials, or young adults in general, often are unable to afford expensive trips due to the price of the plane tickets, hotels, and all the additional costs associated with a vacation. With many people feeling the need to quarantine or stay home, young people feel like it is their time to adventure. They basically have no need to be worried about getting sick and dying as the fatality rate is extremely low for them.

While it may be a positive thing for people willing to travel, it is hitting businesses, like the hotel industry hard. Many of them are having to shed some of their employees as the average total cost is exceeding the demand they are receiving. It is becoming inefficient to have so many employees when the industries have barely any customers.

As the issue of the Corona Virus worsens, so does its effects. What would you do? Take the risk of traveling and maybe try to help those failing industries? Or would you rather ensure your total safety?



Sources:
https://www.houstonchronicle.com/business/article/Corona-hospitality-15109328.php
https://www.nbcnews.com/news/us-news/young-people-capitalize-cheap-coronavirus-flights-if-i-die-i-n1154326

What Parasite's Win Means for the Future of Film

For the first time in 92 years, the Oscars nominated a South Korean film for best picture. Previously, a foreign language film had never been nominated for this category. Parasite, won four Oscars for directing, original screenplay, international film, and best picture.

The film features a story between the rich and poor and a mutual symbiotic relationship between the two. The Kims, a family living in poverty, sneak their way into the service of the Parks, a rich family who has been unknowingly sheltering a woman and her husband in their basement for years. This relationship can be seen as parasitic as the couple and the Kims live off of the Parks. However, the Parks are also parasitic where they rely on the Kims regarding labor. They struggle with washing the dishes and driving. With a complex storyline and symbolism, the film is able to capture the attention of many viewers.

Dominating the Oscars, Parasite has been able to move its way into the United States. Many have been more interested in viewing the film, which has caused the box office sales to go up. The film has grossed over $200 million globally and $44.5 million in the United States, making it the fourth highest-grossing foreign-language film in the United States. As sales continue to go up, the film industry is able to be more diverse. Allowing more international films into Hollywood can drive up sales and create more diversity. Director Bong Joon-ho once said, “Once you overcome the one-inch tall barrier of subtitles, you will be introduced to so many more amazing films.”

Sources:

https://www.indiewire.com/2020/02/oscars-2020-parasite-foreign-filmmakers-1202210455/

https://www.bbc.com/news/world-asia-51449513

https://www.forbes.com/sites/danidiplacido/2020/02/12/what-is-parasite-really-about/#14e0ab662394

https://qz.com/1804271/the-us-box-office-success-of-parasite-provides-a-blueprint-for-foreign-language-films/

Day Trading

As is the common topic at the current time, the Corona Virus has had massive influences on the economy, both globally and nationally. We have all seen the headlines about how stores are selling out of food, water, soap, and for whatever reason, toilet paper. These massive influxes in selling are conditions of very high demand, which lead to massive profits for companies.
Theses good producing companies, Dove, Dawn, Charmin, Nestle, and others have made profits, and are staying afloat while the stock market generally crashes (they all have dropped around 50% as much as many other stocks since the start of the pandemic), but the true victors of this event are the smaller drug and medicine companies. These companies have been up and down in the markets with climbs as they begin to test new vaccines, and drops as they fail. These ups and downs have been predictable and constant, things that short term investors love to see.
Day trading is the practice of buying a stock, planning to sell it within the next few days or weeks, as opposed to the normal method of holding for months or years before selling. With the current patterns of medical and pharmaceutical companies day trading has become an incredible lucrative and safe investment pattern. Companies such as INSP have been able to go up 5% in the past day with announcements of new vaccines, and if they do well, stock goes up and people get out, if it goes bad, then the stock plummets, and more people get it. These companies,s as long as they do not bankrupt, will eventually release a new thing, and the price will go back up.
In this current economic event, medical companies are highly volatile, but never dipping too far down, allowing for people who are quick with moving money to profit very well.

Gentrification: It's Like The Lorax!

      While we were watching the documentary San Francisco, the whole situation of gentrification reminded me of the Lorax.  In the Lorax, a greedy businessman decides to set up shop in a forest making Thneeds out of truffula trees, a key plant in the area.  And while his invention makes people in the cities' lives better, his business gets out of control.  He is destroying the habitat of the species that live there, like the bears, birds, and fish.  The animals are forced out of their homes and into a nomadic lifestyle.
      This is like the situation with gentrification in San Francisco.  Tech developers have stumbled upon an area rich with living availability, history, and culture.  They start with a few simple firms, which bring money into the area.  However, then the dot com boom happens, and people and companies flood into the city.  Yes, they are creating influential companies like Lyft, 23&me, and Paypal, but they are moving in at the cost of the locals.  People that have grown up there and have familial ties to the city are forced to move out of their generational homes and into cheaper surrounding areas.  Yes, money is being brought into the area, but at what cost? Are a few artisan coffeeshops worth the homelessness of the thousands of people being evicted?
      However, like the Lorax, there are ways to restore communities while encouraging economic growth.  In an article by Everyday Feminism, such ways to protect communities are touched upon such as saving public entities (public parks, libraries, and schools) so the low-income locals can still have access to them and implementing affordable housing so people won't have to be evicted.  Some other ways include prioritizing local-owned businesses, such as mom-and-pop grocery stores, which may be the only sources of income for some people and encouraging investments into the community itself instead of just encouraging people from other, wealthier parts to come in and take over.  Invest in the community members and the existing businesses.  They create jobs, which will boost economic growth, and are a key part of the area's culture.  Also, preserve the murals that were painted by community members in response to their struggles. 
       We must do this because, in the words of the Lorax, "UNLESS someone like you cares a whole awful lot, nothing is going to get better. It's not."

https://everydayfeminism.com/2017/07/fight-gentrification-for-community/
https://www.goodreads.com/work/quotes/886002-the-lorax

Corona Virus and the Global Economy

The year 2020 started off with a bang and continues to "surprise" with its twists and turns of events. I hope everyone is aware of Coronavirus or Covid-19 (Which they took years to name) . Covid-19 overall is not a dangerous virus. It is less lethal than the flu and has caused fewer deaths as well but the main fears surrounding it is that Corona Virus is much more closely linked to the common cold than the Flu and as there have not been real attempts to attempt to vaccinate or research that family of virus vaccinations will take time. Keeping that in mind Covid-19 is really only a threat to the old and others who have preexisting conditions. Yet it has led to a collapse of the global economy and almost overnight shifts of production, business, and travel. How and Why?


The economic impacts caused by the Corona Virus, in my opinion, is due largely thanks to two things. One of its initial start in China a worldwide producer of parts and services consumed globally and a trade partner with the US and most of the developed world. Two of the nature of a globalized economy. When this hit China it severely impacted production, at the peak of the struggle of containment in China production quotas had fallen to nearly 20% of initial operating capacities causing a legitimate shortage of supplies globally and leading many to fear for investment in China. Since the global economy is now interconnected more than ever before something in Wuhan China which affects the production of medicinal supplies in India can affect the entire world. This can be seen in the stock market drops along with nations consistently taking more and more concerning actions to secure their economies.


As the economy slows and enters a recision panic is created which leads to mass selling and other events which make the situation worse. India for example over concerns of coronavirus and the shrinking economy has significantly cut its exports of vital materials necessary in developments in common medicines. This led to the mass purchase of all available material creating a shortage and disparity before anything has even occurred. This fear and panic create a cycle of continuous and downward spiraling into a hole that is difficult to come out of.


What now? The Virus is concerning and requires propper attention but doing nothing or going to the extreme does not help anyone. Governments focusing on nationally confronting the issue of the epidemic will be disappointed as the very issue is a global one requiring unified stances against the virus. What I personally would have liked to see was the global leader recognizing the natural economic shrinking due to the virus but announce the measures to combat them. Cancelation of School and large events to give time for testing people has proven effective in japan but now it is at the point where it is not clear what will happen next. Will the virus kill more people or will the economy?

Political Stock Market or Election Gambling?

So Vice news made a video about this website called Predict it. The website is a stock market based on people putting money on predictions of what will occur in the political sphere. The predications are yes or no statements like "Who will be the 2020 Dem Candidate" or "Trump Exceeds X amount of Tweets today by X time". This website is growing in popularity and is an interesting idea as instead of feeding on the political fanaticism and loyalty of partisan politics it uses people's rationale to make a prediction that they believe will occur. The Incentive, of course, is money. All of that being said there is question about the morality of such a concept. "Profiteering" off the American elections has led to bad sentiment surrounding the idea of "Betting" on an outcome. Other arguments point to this as yet another example as a money-making its way into politics and issues with a modern culture so fascinated with instantaneous data. In the end, the website and company are legal and serves as an interesting view of politics as prices are updated in real-time and have even served as a method to predict elections. As of right now, the stock price of a Bernie Sanders win for DNC nomination is 7 cents while Joe Biden is 87 cents.

The Airplane Duopoly

        99% of large plane (140-400 seats, 3,500-8,000 miles) orders are either placed with Boeing or Airbus. Meanwhile, the "Regional" jets (40-90 seats) market is also dominated by two companies: Bombardier and Embraer. There was relatively little overlap between these two duopolies so they had cooperatively coexisted until airlines started becoming interested in planes with 100-150 people.
         Bombardier, a Canadian airline, at a cost of $6 billion, built a C-series plane to meet this demand. When United announced an interest in this plane, Boeing quickly stepped in and offered there smallest 737 series for a bargain at $22 million, to prevent Bombardier from getting a foothold in their market. Then, when Bombardier responded by selling their planes even cheaper to Delta, with Boeing claiming it was less than $20 million. Boeing then filed a complaint with the U.S. Commerce Department alleging that Bombardier was "dumping" their planes in the U.S. market and selling them for less than production costs. Washington eventually agreed with Boeing and imposed a 300% tariff on the foreign, Bombardier planes.
           This is why it is so hard for companies to break into the airplane building business: planes are expensive to make and the established companies are adept and willing to use everything they can to edge out manufacturers who try to steal their business.
            However, in this case, Airbus offered an alliance Bombardier, in which Airbus would sell and service the new airplane because its production was already set up in Alaska meaning that the planes wouldn't be subject to the tariff. This caused Boeing's plan to backfire because now their main competitor, Airbus was benefitting from these new planes, and has forced Boeing into serious talks with Embraer about acquiring their commercial aircraft divisions. If anti-trust regulators approve, we could wind up with a "super duopoly" in the airline industry.

Does Free Really Mean Free?

We all like to get something for nothing. Those buy-one-get-one-free perks, or discount deals on products make us feel good about our purchases. But what if your good fortune causes harm to the person on the other side?

Everyone enjoys free music. Just look at the success of the radio and now Google Home and Amazon's Alexa which can play your favorite song or artist on demand. Software apps like Spotify and Pandora force you to listen to a few ads in order to enjoy free music, but that is hardly a steep price to pay. While you are listening to your favorite tune, have you ever thought about these benefits from the other side? What about the artists and musicians who rely on royalties from their craft to make a living?

That is the argument that surfaced when Napster first appeared in 1999. Debuted as a way to share songs among users, the software allowed music listeners free access to all of the music they could consume without any commitment to purchase. Once a highly lucrative industry, profits had begun to decline. Artists felt the financial pain of their intellectual property being copied without permission and without repercussions.

Behind the discussion of creative ownership lies the issue of copyrights and patents. Are government protections of monopolies necessary to encourage innovation or do they block the very idea they propose to promote? These arguments go back centuries but with the advent of the internet and technological advances, the ability to replicate others’ hard work quickly and effectively with relatively minimal cost, has opened the conversation again. Proponents of free trade, whether it is goods or ideas, believe that perfectly competitive markets reward perfectly. Mozart and Shakespeare lived in an age without copyrights. Would their creativity have been constricted in a world of government controlled distribution of ideas?

By allowing the government to control the flow of information, are we limiting innovation? What is the cost of developing new ideas? The question we should be asking is, what is the true cost of free?

Sources:
https://www.theguardian.com/music/2013/feb/24/napster-music-free-file-sharing
https://www.minneapolisfed.org/article/2002/was-napster-right