WSJ: Since 2011, the NFL has had a rookie wage scale, which allocates relatively affordable salaries to each draft pick regardless of position. That means taking a rookie at one of the more valuable positions has the chance to generate enormous surplus value. It’s why, for instance, quarterbacks on rookie deals are so advantageous—teams can get the most from them before they re-sign on contracts that could cost upward of $50 million a year. In other words, quarterbacks salaries are fixed further below expected value than other positions, so they generate more expected profit for the team ..read more

From former DOJ Economist Greg Werden:  The governments case suggests that its exclusive deals with Apple and Mozilla to be the default search engine on their browsers “allowed Google to maintain its monopoly power [in "general search"] in violation of Section 2 of the Sherman Act.”   However, the government's brief also suggests that Google's scale is very important, which implies that its scale economies--not its exclusive deals--that maintain Google’s dominant share.  ..read more

Around the time of the first Earth Day (1970), Environmentalists were making dire predictions (via Mark Perry):  ...world famines of unbelievable proportions. some 4 billion people, including 65 million Americans, would perish in the “Great Die-Off.” By the year 2000, … there won’t be any more crude oil. Lead, zinc, tin, gold, and silver would be gone before 1990. Why were these predictions so spectacularly wrong?  ANSWER: If prices increase, producers find more supply or develop alternatives. For example, oil reserves are much bigger now due to technological innovations like dire ..read more

The Economist: Declining fertility and declining immigration lead to: DEATH SPIRALS: ... the biggest problem is that, once a place starts shrinking, ... there is far more housing available than people to fill it, ... landlords and even homeowners stop maintaining their properties, ... blight spreads ..  TAXES PAID BY FEWER PEOPLE: as cities lose population, the cost of providing public services [mostly public pensions] tends to stay about the same. ... the result is that the remaining taxpayers must pay more simply to support the same services.  STATE CANNOT PAY ITS PENSIONS: Acro ..read more

Econ Journal Watch: Combined with the erroneous reverse-causality nature of McKinsey’s tests, our inability to quasi-replicate their results suggests that ... they should not be relied on to support the view that US publicly traded firms can expect to deliver improved financial performance if they increase the racial/ethnic diversity of their executives ..read more

Making the pie bigger ("the growth agenda") means we are not fighting over a fixed pie ("zero sum fallacy"), and it guides decision making, "does this policy increase the size of the pie?" MarginalRevolution points to a Jason Furman graph showing that a 0.5% growth rate difference between the US and Argentina over the last 120 years has lead to a per capita income in the US that is over three times as large as Argentina's [note exponential scale ..read more

 NYT (12/23):   As rising inflation threatens his presidency, President Biden is turning to the federal government’s antitrust authorities to try to tame red-hot price increases that his administration believes are partly driven by a lack of corporate competition. On Christmas 2021, the headline in the NY Times business section was "As Prices Rise, Biden Turns to Antitrust Enforcers."  Larry Summers immediately bashed the idea: “The emerging claim that antitrust can combat inflation reflects ‘science denial,’ ” tweeted Harvard economist Lawrence Summers, a senior ..read more

Amazon had been concerned with Walmart's and Target's growing presence as online marketplaces. Now Sebastian Herrera at the WSJ reports that their focus has shifted to Temu and Shein. So far, Amazon's US market share is larger than the other four combined. But these newcomers (to the US) believe that this could change. Temu's number of active users is approaching Amazon's, but Temu's revenue per user is much lower. It is interesting how all of these firms are staking out differentiated products strategies. Walmart and Target leverage their brick & mortar stores, Shein focuses on fast fash ..read more

From "Diversity and Performance in Entrepreneurial Teams" (SSRN):  Among the randomly-assigned teams [of MBA students], greater diversity along the intersection of gender and race/ethnicity significantly reduced performance.  However, the negative effect of this diversity is alleviated ... [when teams can choose their teammates] ...teams with more female members perform substantially better when their faculty section leader was also female.  ..read more

A WSJ article by Alexandra Bruell reports that three years ago the Atlantic magazine ran a $20 million deficit which led to layoffs. A new boss, Nick Thompson, was tasked with turning this around. Along with editorial changes toward longer investigative pieces rather than breaking news, the Atlantic raised subscription prices 50%. How did he know to do this? Thompson’s team ran experiments to determine the best way to charge more without alienating new readers. It is offering fewer stories free and no longer discounting subscriptions. Last year, it raised prices for annual subscriptions to $8 ..read more