The Law of One Product: Robert Frank, Tesla, and Hurdle Pricing

“Why some buyers pay more than others.”  Robert Frank begins the so-named chapter of The Economic Naturalist with this statement: The law of one price applies most forcefully in perfectly competitive markets—roughly speaking, markets like those for salt or gold in which numerous suppliers sell highly standardized products. Frank goes on to probe the paradoxical-seeming … Continue reading The Law of One Product: Robert Frank, Tesla, and Hurdle Pricing

A Black Friday question for The Economic Natualist

In honor of Black Friday, I have a question for the ‘Economic Naturalist’.  My wife and I both received Thanksgiving sale catalogues from a clothing chain retailer.  A sticker on the front of my wife’s catalogue offered 40% off a qualifying purchase; the sticker on the front of mine offered 50% off.  Why would a … Continue reading A Black Friday question for The Economic Natualist

Sanforized* Economics: A Look at Shrink Theory

A week or so ago, Alvaro La Parra-Perez tweeted a link to a Rafael del Pino master conference presentation (think of this as being asked to address bigwigs by Brookings Institute or American Enterprise Institute) by John Joseph Wallis of the University of Maryland.  Wallis, an economic historian, entitled his presentation “The Nature of Long-Term … Continue reading Sanforized* Economics: A Look at Shrink Theory

William Baumol (1922-2017)

"A distressing phenomenon is occurring throughout the industrialized world.  Many community services have been deteriorating - fewer postal deliveries, larger classes in public schools, less reliable garbage pickups - even though the public is paying more for them." --Baumol and Blinder, Macroeconomics: Principles and Policy, 5th Ed., 1991 I so hated economics in college that … Continue reading William Baumol (1922-2017)

Getting It Right But Still Not Getting It On Trade

Large among the benefits of my Foreign Affairs subscription are the “Subscriber Exclusives” – downloadable virtual issues that show FA has been attending for years to today’s hot button topics.  A “Who Benefits from Trade?” compendium was made available last September.  From oldest to newest the contributions range from G.B. Roorbach’s “Foreign Trade or Isolation”, … Continue reading Getting It Right But Still Not Getting It On Trade

Two Cheers for Positivism: On the Methodology of Economics

Bruce Caldwell is an economist, historian of economics, Hayek scholar, and Director of the Center for the History of Political Economy (“CHOPE”) at Duke University.  I recently came across his 2012 Southern Economic Association presidential address, “Of Positivism and the History of Economic Thought” (VI), in which he links the decline of positivism with the hope … Continue reading Two Cheers for Positivism: On the Methodology of Economics

Against the Winds: Can Innovation Overcome the Negative Trends in the American Economy?

On average, over the last 145 years, the economy of the United States, measured by GDP per capita, has grown 2% per year.  Over the last 45 years, however, US per capita growth has been markedly slower, averaging 1.62% for the period 1970-2014.  In the wake of the 2008 financial crisis and the slow recovery … Continue reading Against the Winds: Can Innovation Overcome the Negative Trends in the American Economy?