Tuesday, February 26, 2008

"Columbine To Va. Tech To NIU: Gun-Free Zones Or Killing Fields?"

I have a new op-ed at Investors Business Daily:

As Northern Illinois University restarts classes this week, one thing is clear: Six minutes proved too long. It took six minutes before the police were able to enter the classroom that horrible Thursday, and in that short time five people were murdered, 16 wounded.

Six minutes is actually record-breaking speed for the police arriving at such an attack, but it was simply not fast enough. Still, the police were much faster than at the Virginia Tech attack last year.

The previous Thursday, five people were killed in the city council chambers in Kirkwood, Mo. There was even a police officer already there when the attack occurred. . . .

UPDATE: Fox News is reporting a gun threat at at small Ferrum College (1,000 students). I guess I would like to know if this is a concealed handgun permit holder. If it is the school's president is threatening suspension as a first initial response. The president obviously doesn't understand the notion of deterrence. From Fox News:
Ferrum College canceled classes and went on lockdown Tuesday as police searched for a suspicious person on campus.

A Franklin County Sheriff's Department spokeswoman said college President Jennifer Braaten activated an alert system and ordered the lockdown after receiving reports of a suspicious male on the campus. Classes were canceled for the day. . . .

No shots have been fired and there have been no injuries.

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Is the "high price" of everything from coffee in restaurants to popcorn in movie theaters due to monopoly power?

A new paper by Richard Gil and Wesley Hartmann provides an explanation for the "high price" of popcorn in movie theaters:

Prices for goods such as blades for razors, ink for printers and concessions at movies are often set well above cost. This paper empirically analyzes concession sales data from a chain of Spanish theaters to demonstrate that high prices on concessions reflect a profitable price discrimination strategy often referred to as metering price discrimination. Concessions are found to be purchased in greater amounts by customers that place greater value on attending the theater. In other words, the intensity of demand for admission is metered by concession sales. This implies that while some consumers' surplus may be reduced by the high concession prices, surplus of other consumers on the margin of attending may increase from theaters' decisions to shift their margins away from movies and toward concessions.

First as a side note, most theaters, at least in the US, do not prevent people from bringing in concessions with them to the theater (I don't know about Spain), and that is at least inconsistent with the monopoly type story. It is also interesting to note that these claims about above marginal cost pricing are made for many similar product such as wine in restaurants or coffee or the differences between lunch and dinner prices, and it is hard to believe that monopoly power actually explains the "high prices" in all these cases. Russell Roberts and I provided a cost based explanation for all the phenomenon back in 1991 here. I guess that my biggest question is what else would one expect relating the log(concession revenue) with log(attendance) and Box Office revenue per attendee. Concession revenue goes up with attendance (though at a lower rate than attendance revenue -- congestion) and it goes up with box office revenue per attendee (presumably picking up the fact that higher revenue per attendee means fewer old people and very young people). What is the problem here and why is price discrimination the only answer here? By the way, when they run a regression that includes information on the number of screens and seats per screen (Table 2, specification 2), those two variables really explain all the variation in popcorn prices (something akin to the hypothesis that Russell and I advanced). I am also not clear why logs are used for concession revenue and attendance, but not box office revenue per attendee.


Sunday, February 24, 2008

Another couple nice mentions of Freedomnomics

Here is one mention:

After his book Freedomnomics, I think that Professor Lott is my favourite economist. He generally makes a lot of sense, although his blog tends to focus on the benefits of gun ownership a tad more than I would prefer (not that I am anti-gun ownership, it just is not a subject which interests me too much).

And another nice mention of Freedomnomics can be found here:

For those interested in more on the economy, I highly recommend Basic Economics by Thomas Sowell. This easy to understand book explains the basic tenets of our free market. Other great reads include Applied Economics and Freedomnomics.


Thursday, February 7, 2008

Another Review of Freedomnomics

Another review of Freedomnomics:

I recommend Freedomnomics, especially in its audio format. While it didn’t convince me to take classes in economics, it did prompt me to think a little more deeply about the way that I interact with businesses, government, and audiobooks.

Overall, I thought what he thought was the main point of the book was much too narrow.


Friday, February 1, 2008

Another Review of Freedomnomics

Brian Shelly has a review of Freedomnomics here:

However, I read Freedomnomics by Economist Dr. John Lott. This book was a pretty easy read and I found some of the information jaw dropping. His specialty is crime and punishment and Chapter 4, which focuses on that, just blew me away. It really showed how conventional wisdom is flat out wrong when you look at the data on crime. . . .