Sunday 2012-12-30

Why Popcorn Costs So Much at the Movies by Richard McKenzie

Should have been titled 'Conjectures that we have somewhat experimentally tested ...' Starting with Akerlof's "Lemon" theory, which says that adverse selection causes more bad cars to be on the resale market than at dealerships, and thus there's a drastic drop in price as soon as you drive a new car off the dealer's lot. However, it seems to not be an experimentally robust explanation as the Federal Trade Commission's report indicates.

A better interpretation of the book is that listing the common variants in pricing, so that one can try them in one's own life.

Garrick Blalock, Vrinda Kadiyali, and Daniel Simon, Cornell University economists, have ... found that the 9/11 events and resulting security measures reduced air travel volume, independent of other forces, by about 5% across all of the nations's airports (and 8% from the nation's major airports). The resulting increase in car travel following 9/11 led to approximately 242 more automobile deaths per month than would otherwise have been predicted for the last quarter of 2001.
-- Price and the "Law of Unintended Consequences"