Friday, March 27, 2009

Hershey's Krackel

Where can you buy a bag of Hershey's Krackel? Just that product and nothing else in the bag. Right now, you can buy a mixed bag of mini bars with some krackel, some Mr.goodbar and proportionately more regular milk chocolate mini bars. Why would Hershey's not sell krackel in independent bags, and even in assorted bags have just a few? Here are my economic explanations:
  1. Krackel is probably not as popular as Hershey's regular milk chocolate, aka demand for Krackel is not high enough to warrant Hershey's to make an independent bag of just Krackel
  2. Nestle Crunch is a close substitute and probably has the higher market share
I cannot think of other economic reasons. Do you have any?

ps: I emailed Hershey's marketing department and got this reply:

Thank you for contacting The Hershey Company. Your comments about KRACKEL chocolate bar are important.

We are sorry to disappoint you, but KRACKEL chocolate bar is currently not available. This product is not being produced for nationwide retail distribution at this time and we are unable to provide you with details as to when and where you might be able to obtain this product. We apologize for any inconvenience and assure you that your comments will be shared with our Marketing Department.

Friday, March 20, 2009

Rejecta Mathematica

I do not know how I stumbled onto this page, but the idea is brilliant. It is an online open access journal for Math papers that have been rejected by other peer reviewed journals. They believe that even rejected papers add value to the academic community. They even offer franchise options to other sciences to start a Rejecta journal within their academic community. This idea is great at so many levels. On a pure academic level:
  1. It helps authors vocalize their ideas even if they are rejected by regular peer-reviewed journals
  2. Seminal works like Tullock's 1967 article which was rejected several times before being printed in the Western Economic Journal, would probably get noticed right away
As an economic idea, what a wonderful entrepreneurial idea!! Any graduate student knows getting into the academic cliques of publishing is not an easy task. It is a rigorous time consuming process. However, I wonder if such an idea can work in Economics. From a grad student or young professor perspective, this may not be such a great signaling device. Imagine lines on your cv that state even one publication in Rejecta Economica. It could be a bad signal to potential employers or those that decide tenure. They know that your ideas have been rejected by regular peer reviewed journals. 
There may be flaws in the current publishing system (what system is perfect?!), but who would make the first move to start such a journal in the first place, and even if someone did who would be bold enough to send papers to them? My guess is the first mover problem would be solved by those that have little to lose from such exposure, such as tenured professors.  There would be a self-selection bias here. In addition, so many academic economists have blogs that exist as a medium to voice incomplete ideas or those that have little chance of being published or have even been rejected. The idea is cool though!!

Tuesday, March 10, 2009

The Economics of Vegas

One of the best things about being a GMU economist is that you look at the world differently. This past week, I have been at the Annual Public Choice Society meetings in Las Vegas and several things about the local economics have intrigued me. Here is a sample:
  1. Why is the law against public intoxication non-existent here? People can buy drinks and walk around with them on the streets and will not be arrested. How have the Casino lobbies worked this out?
  2. Is there collusion between the different Casinos to prevent entry into the Casino market? I personally do not believe there is, but a cab driver suggested it to me and I want to know the economics behind it. 
  3. The laws against solicitation are also different here. Why and how did the lobbies work that out? 
  4. How big are the profits and rents in the adult entertainment industry? There are several things to do in Vegas and how do Casinos keep their business from eroding due to competing entertainment activities?
  5. Every Casino and Hotel has free some free show or the other which has cost a lot of money to establish and continues to cost money to run. For example the Bellagio Fountain, the moving statues at Caesar etc. Why do they have free shows, as in what is their benefit or incentive to spend millions of $$$ to build and operate these. 
I am sure there is a literature on several of these questions. It would be interesting to research the answers to the seemingly obvious and simple observations in Vegas

Sunday, March 01, 2009

Beware!! Prices are falling

The Times has this front page news item. It is back to Keynesian Economics again, talking about deflation and unemployment. However here is something puzzling. The article mentions that prices will be 2% to 3% lower by September compared to a year before. Let me understand this right, the private sector is freezing and cutting salaries, and prices are falling at the same time and that is a cause of concern? Remember the basic budget equation I = PxX +PyY. I is falling, Px and Py are also falling and we are terribly concerned!! I don't get the logic. I understand that falling I is not that good, and my sympathies to those who have had to take a pay cut. But when your desk gets cluttered, you clear out the mess right!! You get rid of papers you do not need anymore and this is similar here. In basic positive economic terms, we are simply economizing. No reason to lament it. On a different note, I am glad to see the article report that the Public sector is doing nothing to cut salaries, and is in fact raising salaries. What does that tell us about efficiency and business savviness in the public sector?