Wednesday, December 11, 2002

"Microsoft Wages Quiet Campaign Against Free Software", WSJ, December 9 2002. [Categories: Market Definition, Microsoft, Other (Incentives)] P.S. Incentives part is that Microsoft claims that distributors will have little incentive to sell freely available software... What do you think about their argument? 6:44:37 PM    comment []

Friday, November 08, 2002

"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 []

"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 []

"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 []

Thursday, October 31, 2002

"Americans Head to Mexico to Buy Cut-Rate Drugs", WSJ October 24, 2002. [Categories: Insurance, Market Definition, Price Discrimination] 3:46:59 PM    comment []

Sunday, October 27, 2002

"Web Effect is Greater on Airline Revenue Than Costs", WSJ, October 17, 2002.  Do you agree with this article's analysis?  If so, what should airlines do now vis-a-vis their internet strategy? [Categories: Airlines, Costs, Market Definition, Price Discrimination] 12:03:52 PM    comment []

Wednesday, October 02, 2002

"Costly Race in the Sky: Same Route, Same Plane, Yet United's Flight Costs More To Operate Than JetBlue's", WSJ, September 9, 2002. 7:43:02 PM    comment []

Thursday, September 26, 2002

"Membership is Losing Some of Its Priveleges: American Express Card Perks Under Scrutiny", WSJ, Tuesday September 10, 2002. Why is the 2.95% MSC charged on corporate purchases higher than that charged on most non-corporate purchases? [LINK: Market definition (1,2), market segmentation (10), incentives (18), adverse selection (19)] 1:41:30 PM    comment []

Tuesday, September 24, 2002

"American Express Retires The Classic Green Card: Yielding to Demand for Miles, It Will Offer More Rewards, But Debit-Card Threat Looms", WSJ, September 24, 2002. "Membership Rewards enrollees spend four times as much on their AmEx cards as cardholders who don't get points.  So in an effort to entice all its cardholders to spend more liberally, the company decided to put every charge-card customer in its Rewards program."  Are new Rewards program members likely to spend as much as existing program members?  Most challenging questions:  Isn't AmEx better off under its old system offering two options (Rewards program and non-Rewards) since then it can price discriminate (through self-selection)?  Explain why the following is possible: "As long as members are given a choice as to whether to be Rewards program members, the Rewards program will always be unprofitable (even with zero fixed costs).  But if all members are automatically enrolled in Rewards, then the program will be profitable."  [LINK: demand substitutes (1,2), network externalities (7), self-selection schemes (11), moral hazard & adverse selection (18,19) & as source of "market failure" (19)] 6:03:29 PM    comment []