Friday, November 08, 2002

"Can Stodgy GM Turn Stylish? Cost-Saving Technology Could Put Concept Cars on the Road", BusinessWeek November 11, 2002. [Categories:  Costs (Technology), Demand (Brand)] 3:58:16 PM    comment []

"The $199.86 Solution: Microtel's bargain-basement PC is OK for basic computing, but face it -- the Lindows O/S is a major trade-off", BusinessWeek November 11, 2002. [Categories: Demand (network externality in O/S), Market Definition, Microsoft] 3:55:06 PM    comment []

"Airbus is Set to Give Final Nod for Superjumbo Jet", WSJ December 19, 2000. "Airbus Comes of Age with A-380 Super-Jumbo Jet Challenges Boeing's Last Monopoly", USA Today June 21, 2001. "Boeing Weighing Speed and Efficiency in Deciding Newest Plane", Associated Press November 7, 2002. Summary: Airbus' super-jumbo has received numerous orders.  Boeing appears to have backed off from competing directly against Airbus' super-jumbo, instead favoring a smaller plane that will greater distances.  According to Boeing, this plane may also be much faster (as in the Sonic Cruiser idea) or just super-fuel efficient. (See most recent AP article.) [Categories: Airlines, Demand, Game Theory (first-mover, threats & commitments), Market Definition] 3:52:25 PM    comment []

"Carnival, Winning Princess Bid, Is Poised to Expand Dominance", WSJ October 28, 2002. [Categories: Other (Antitrust, Monopsony power)] 3:41:42 PM    comment []

"Air Canada Rides Out Stormy Weather", WSJ October 28, 2002. "Air Canada this summer started four niche airlines: Tango (a low-cost, low-fare national carrier), Zip (a low-fare carrier in Western Canada) ... [and is considering niches focused on] cargo service and business travel."  (See also Air Canada Vacations and Jetz -- the new business travel-oriented subbrand.) What do you make of this "subbrand strategy"? Demand issues: Is flying Tango substantially different than flying on a standard flight with a cheap, restricted ticket?  What about flying Jetz vs. on a standard flight in business class?  Cost issues: Are cost advantages to segment-specialization great enough that we can ever expect airlines to totally specialize in this way (for all of their flights)?  In particular: who is more vulnerable to entry, an airline that carries several types of passengers on several flights or one that carries only a single type of passenger on each flight? Price Discrimination Issues: Does Tango need to require advance purchase and a Saturday night stay to segment the market of business travellers from leisure travellers? (One can argue this both ways: What facts could we learn to decide the issue?)  [Categories: Airlines, Demand, Market Definition, Price Discrimination] 3:16:28 PM    comment []

"Fast-Food Chain makes a Move Out of the 'Box'", WSJ October 29, 2002. Jack in the Box plans to open 100 to 150 convenience stores that will be co-located with their restaurants. [Categories: Costs (Economies of Scope), Demand, Other (Bundling)] 2:58:03 PM    comment []

"Coke Strays From The Real Thing: Investors Fret That Bottled Water, Other Beverages Don't Quench Their Thirst for Soft-Drink Profit", WSJ October 29, 2002. What is Coke's strategy for expansion into low-end water products such as Danone? [Categories: Market Definition, Price Discrimination] 2:47:39 PM    comment []

"Southwest Sets Standard on Costs", WSJ October 9, 2002. [Categories: Airlines, Costs, Market Definition] 2:16:34 PM    comment []

Imports to the West Coast ground to a halt in late September 2002 as the dispute between dock owners and the ILWU grew heated as owners shut down the docks.  A federal judge ordered a 60-day colling off period in which workers were required to return to work.  Shortly thereafter, the main issue of contention appeared to be resolved: and "West Coast Ports Set Tentative Deal", WSJ November 4, 2002. If the dock owners were able to make a truly take-it-or-leave-it offer, would the ILWU have accepted a deal in which new technologies are introduced and new technology jobs are non-unionized? If the ILWU were able to make a truly take-it-or-leave-it offer, would the dock owners have been willing to accept a deal in which no new technology is ever introduced?  My own opinion is that the dock owners truly required that the new technologies be introduced, so in fact the final deal is very close to their outside option, i.e. the union was the big "winner".  (In terms of our class game, they offered the owners only $1 and the owners accepted.)   How could the parties come to agreement -- with the union victorious -- so quickly after a judge forced the workers back to work?  Which of the following helped the union and which (if any) helped the owners: (i) Christmas, (ii) 60-day limit to cooling-off period, (iii) AFL-CIO involvement? [Categories: Game Theory] 2:14:17 PM    comment []

"Dot-Com IPO Pricing Baffles Economists", WSJ September 30, 2002. (Apologies for white line created by copier problem.) The article presents several potential explanation for IPO underpricing: (1) compensation for bearing risk, (2) indifferent executives, (3) "bogus belief" about importance of buzz due to "thought contagion", or (4) subversion by executives in exchange for personal access to other IPOs.  What do you think? [Categories: Moral Hazard]  1:49:48 PM    comment []

"Drug Cost-Control Plans Push Many to Do Without", WSJ October 29, 2002.  Doubling a uniform co-payment from $5 to $10 per prescription lowered per person drug costs from $725 to $563, a 22% drop.  But doubling co-payment using a two-tiered system of (cheaper) preferred drugs and non-preferred drugs led to a 33% drop in per person costs.  Explain why one would expect this result, that a two-tiered system will reduce spending by more. [Categories: Insurance, Moral Hazard]  1:35:26 PM    comment []