The Ronald Coase Institute is hosting a conference to celebrate the life and work of Ronald Coase. “The Next Generation of Discovery: Research Inspired by Ronald Coase” will be held in Washington, DC, March 27-28. Speakers will include Nobel laureates Kenneth Arrow and Oliver Williamson, other distinguished senior scholars and practitioners, and young alumni of the Ronald Coase Institute.
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Regulation and Contract Choice in the Distribution of Wine
That’s the title of a new working paper with one of my former students, Michelle (Mullins) Santiago. You can access the full paper here. The abstract follows:
The wine industry in the United States has grown tremendously over the past few decades, from fewer than 1,000 wineries in 1980 to upwards of 7,700 today. The growth has occurred over a period that has seen substantial changes in the structure of the wine industry, the modes of distribution available to wineries, and the regulations governing them, perhaps most notably the advent of direct-to-consumer shipping of wine across state boundaries. Most economic research, however, has focused on supply relations between wineries and wine grape growers rather than between wineries and their downstream markets. In this paper we examine wineries’ contracting behavior with downstream distributors and the effects of industry structure, winery organizational structure, and state laws regarding direct shipment and distribution franchise laws.
The Coase Theorem In Action
When transaction costs are sufficiently low, private market transactions work very well for reallocating property rights to their highest valued use. That’s the basic idea of the notion George Stigler popularized as “the Coase Theorem”. Looks like US Bank not only recognizes it, but sees themselves as lowering transaction costs with their app. (HT Greg Mankiw)
http://youtu.be/6uwmQh__ZLs
When Consumers Speak
I spent the past week teaching managerial economics in a new masters of agribusiness and entrepreneurship program at Agricultural University-Plovdiv. It was a good opportunity to reinforce (or in some cases introduce) an understanding of property rights and of the role of markets not just to coordinate resources but to elicit, reveal and transmit knowledge throughout the economy. (It was also somewhat apropos that the class ended on the 25th anniversary of the fall of the Berlin wall, and Nov 10 is Bulgaria’s anniversary of the end of Communist control.)
One of the issues we discussed was the sensitivity of many Bulgarians (and Europeans in general) to things like genetically modified organisms (GMOs) in the food supply and the use of antibiotics and growth-stimulating hormones in meat and dairy. We discussed differences in attitudes between consumers in the US (in general) and in Europe, and differences among consumers in the US. We discussed alternate ways of responding to those sensitivities–whether government-imposed regulations or privately-organized initiatives in response to consumer demands. So news this week from the US provided two very timely examples. Continue reading “When Consumers Speak”
Bridging The Gap To Feed A Growing World
That’s the title of the public lecture I’ll give tomorrow (3 Nov) at Agricultural University in Plovdiv, Bulgaria. The talk is part of a ceremony celebrating the beginning of a new Master’s program in Agribusiness Management and Entrepreneurship that AU is starting in collaboration with the Ag & Applied Economics Department at the University of Missouri.
The basic idea of the talk is that feeding 9.6 billion people by 2050 (the UN’s current projection) will require more than just improvements in agricultural production technologies and practices. As it is now, an abundance of food is wasted globally each year, even as millions suffer from malnutrition. So the solution has to be about more than just growing more food.
Much of the waste results from poor political and market institutions globally. These problems can only be addressed by better understanding how markets work and how policy and regulation affects market workings; and by encouraging innovation not only in production technologies, but in value chain structures that deliver more and better food that people want to where they are. This new masters program is intended to help equip leaders in Bulgarian agriculture to do just that.
After the ceremonies, I’ll be teaching the first of four courses in the program being taught be faculty from Missouri over the next 14 months.
If you happen to be in Plovdiv, you’re welcome to drop in for the public lecture.
Law & Econ of Consumer Protection
Today and tomorrow I’m participating in a workshop on consumer protection at the George Mason Law & Economics Center (LEC). The line up includes some interesting speakers, including Howard Beales, James Cooper, and TOTM co-blogger Paul Rubin.
The workshop is part of a Privacy Fellows program the LEC is organizing this year, involving scholars from a range of disciplines, to stimulate research related to issues of data privacy and the regulation of data collection and use. This is an area in which there is relatively little work.
And in other “consumer protection” news, Michigan’s governor opted to bow to the traditional auto industry cronies and signed anti-Tesla legislation into law. One could say it’s just one more step in a decades-long string of anti-consumer protections of a politically powerful industry.
Crony capitalism wins again; consumers and innovators be damned.
The Economics of Jimmy John's "Freaky" Non-compete Clause
Jimmy John’s, the national sub-sandwich company known for being “freaky good, freaky fast,” has been in the news for being rather freaky about having employees sign non-compete clauses as part of their standard labor agreements.
Non-compete clauses are not uncommon for senior executives, technology professionals, or professionals whose business is built on client relationships, like lawyers or sales representatives. And although an article in the New York Times this summer highlights how non-compete clauses are increasingly appearing in unexpected places, one certainly wouldn’t expect such an agreement as a condition of employment at a sandwich shop–unless maybe it was to protect the time-warp technology for their freak fast delivery.
There’s just one problem with the hype in the media around this issue: most of it is ignoring some important facts that call into question just how big a deal this is, except as a media stunt for some disgruntled employees. For example: Continue reading “The Economics of Jimmy John's "Freaky" Non-compete Clause”