The real price of everything is the toil and trouble of acquiring it." -Adam Smith (WoN, Bk I, Chapter 5)In which the Knower of Important Things shows how tran...
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Motives and Morals of Taxes, and an Homage to Bob Barker
There are three reasons to impose taxes, it seems:1. To discourage behavior "we" don't like2. To raise revenue for things "we" want 3. To achieve a pattern of social justice in the distribution of resourcesWhat does transaction cost analysis have to tell us about all this?And Bob Barker, and the 99 cent price point.Have you even read Marx?And a new letter.NOTE: This is the last of the regular episodes of Season 1. With the start of the new academic year, TAITC will move to once per month, with longer episodes coming out the last Tuesday of each month. APOLOGY: I said "Meltzer and Richards" with an "S", twice. That's wrong. It's just "Richard," no "S."Links to Resources:Quote Investigator on the ditty about "Tax that man"Meltzer, A. H., & Richard, S. F. (1981). A Rational Theory of the Size of Government. Journal of Political Economy, 89(5), 914–927. Costs of tax compliance in the U.S.Chilean tax system Laffer CurveCharlie Gibson/Barack Obama exchangeWho Pays Federal Income Tax? Harvard Business Review article on $X.99 pricingOn the Problem of "Fictitious Reference Pricing"Bob Barker ObitIf you have questions or comments, or want to suggest a future topic, email the show at [email protected] ! You can follow Mike Munger on Twitter at @mungowitz
All You Can Eat, or By the Ounce?
There are many different pricing and packaging schemes for serving food in restaurants, and they all seem to coexist. But there are some significant differences, and thinking in terms of transaction costs and adverse selection can help us understand why.Plus, a TWEJ on the eternal optimism of Keynesians: THIS time it might work!Some links:Yoram Barzel, Measurement Cost and the Organization of Markets. The Journal of Law & Economics, Vol. 25, No. 1 (Apr., 1982), pp. 27-48 https://www.jstor.org/stable/725223Comeback of "all you can eat" https://www.today.com/food/restaurants/all-you-can-eat-buffets-comeback-rcna99462Buffets, pricing, and management, seller's perspectivehttps://www.cheftalk.com/threads/pricing-salad-bars-by-weight.70748/https://pdfcoffee.com/buffet-cost-control-pdf-free.html David V. Pavesic (1994) By-The-Ounce Pricing for Salad Bars, Journal of College & University Foodservice, 1:4, 3-11David V. Pavesic and Paul F. Magnant (2005; 2nd Ed). Fundamental Principles of Restaurant Cost Control, pp. 238-246. Prentice Hall. Consumer's perspectivehttps://www.budgetbytes.com/hit-salad-bar-like-boss/ https://www.refinery29.com/en-us/whole-food-cheap-salad-bar-hacks If you have questions or comments, or want to suggest a future topic, email the show at [email protected] ! You can follow Mike Munger on Twitter at @mungowitz
The Devil Went Down to Grievance: Tuh, Taxes, and HOAs
Are HOAs an argument for anarchy, or an example of it?Ex post recontracting as a form a of aggression, when the enforcer of contracts is also a party to the contract.And of course the TWEJSome Links:How to pronounce “Tiebout” Why you should care about TieboutMunger on Wealth Taxes, and "Tuh" the Dog Makovi on "Cookie Cutter Covenants"NH property owners say HOA elections are undemocraticPublic Goods and "Club" GoodsIf you have questions or comments, or want to suggest a future topic, email the show at [email protected] ! You can follow Mike Munger on Twitter at @mungowitz
The Red Dots Three, Parsley, and Counting Sheep
The listener letter last week asked about the the three "red dots" that are used to identify liquor stores in South Carolina.Turns out that this kind of "shibboleth" is a way of identifying and discriminating, in ways that can be useful, or harmful.Red Dots in South Carolina:The Robert Moss (SOUTHERN SPIRITS) versionSouth Carolina Encyclopedia (from Moore, John H. “Solving the Red Dot Mystery.” Sandlapper, spring 2000: 32–34.)ShibbolethGileadites and EphraimitesBackground on the conflictNaked mole rats use shibboleths (thanks to Robert Lawson, who knows him some mole rats)The Stone Signposts of PompeiiWorld Series as Shibboleth (Robert T. Gravlin, 23rd Armored Engineer Battalion)Appropriate Measures of InflationERRATUM: MJ writes to point out that if the economist could really count, he would have miscounted the number of sheep, adding one, because he counted the dog. That's fine. But then why did the shepherd agree that the number of sheep was correct? It should have been one over. It's okay that TWEJ's are not funny, that comes with the territory. But in this case there is a logical problem. My mistake, and thanks, MJ!If you have questions or comments, or want to suggest a future topic, email the show at [email protected] ! You can follow Mike Munger on Twitter at @mungowitz
Packing Out Your Trash, Brown M&Ms, and $100 Bills on the Sidewalk
How do you trade off your own interests against the interests of others? And what role do transaction costs play? A discussion of our "interest" in the welfare of others, and the complexity that adds to economic indifference curves. Things take an interesting turn, going toward how transaction costs can shape our institutions and preferences, ranging from a marine fishery to a bowl of M&M's. And TWEJ. Always, TWEJ.Some Resources:Gary Lynne, on Dual Interest Theory: https://journals.sagepub.com/doi/abs/10.1177/02601079231172366?journalCode=jieaNeo(Classical) and Rama-Kandra, on caring about others: https://www.imdb.com/title/tt0242653/characters/nm0924502On Coase, Olson, and the Problem of Encompassing Institutions:Justice Department Merger Guidelines: https://www.justice.gov/archives/atr/merger-guidelines-and-integration-efficiencies-antitrust-review-horizontal-mergers: https://www.justice.gov/archives/atr/merger-guidelines-and-integration-efficiencies-antitrust-review-horizontal-mergersRonald Coase, 1937, "The Theory of the Firm." https://onlinelibrary.wiley.com/doi/full/10.1111/j.1468-0335.1937.tb00002.xRichard Jankowski on Encompassing Organizations: (1989). Preference Aggregation in Firms and Corporatist Organizations: The Enterprise Group as a Cellular Encompassing Organization. American Journal of Political Science, 33(4), 973–996. https://www.jstor.org/stable/2111117Robert Keohane, "International Institutions": https://www.jstor.org/stable/2600589Mancur Olson, the Rise and Decline of Nations. https://www.jstor.org/stable/j.ctt1nprddThe "Coase Theorem" and the "$100 Bill on the Sidewalk" Joke: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3405632On Brown M&Ms:The DLR interview (excerpts): https://www.youtube.com/watch?v=_IxqdAgNJckNPR on Brown M&Ms: https://www.npr.org/sections/therecord/2012/02/14/146880432/the-truth-about-van-halen-and-those-brown-m-msBackground, including a copy of the relevant part of the contract: https://www.insider.com/van-halen-brown-m-ms-contract-2016-9If you have questions or comments, or want to suggest a future topic, email the show at [email protected] ! You can follow Mike Munger on Twitter at @mungowitz
The real price of everything is the toil and trouble of acquiring it." -Adam Smith (WoN, Bk I, Chapter 5)In which the Knower of Important Things shows how transaction costs explain literally everything. Plus TWEJ, and answers to letters.If YOU have questions, submit them to our email at [email protected] And check out the Facebook page, to leave comments and answer comments from other listeners: https://www.facebook.com/profile.php?id=100092342062186