Marginal Revolution

Had I mentioned...?

That Tokyo is the best food city in the world?  That's by an order of magnitude; Paris and others aren't close.  At this point my best guess is that Osaka is number two. 

I thank Yan Li for the pointer to the link, which is interesting on another topic as well.  We visited a quite amazing toilet shop here, which was impressive most of all for its seriousness, not just for its product.  It was I believe on the 26th floor (L-Building, Shinjuku), so there is no walk-in trade for them.  They play stormy Beethoven and offer talking toilets, toilets that perform lab tests on your ****, and toilets that can be programmed to do things I hadn't even thought of before.

Economists Know the Price of Everything

In other disciplines to leave your university because another offers to pay you more entails personal humiliation and status degradation to a not inconsiderable degree: you are supposed to value ideas and colleagues and students, not cash. In economics, however, the thrust of the discipline makes a failure to respond to market forces a moral fault in itself.

Brad DeLong explaining why public universities are having an especially difficult time hiring and keeping economists now that the privates are boosting salaries to a tremendous degree.  Experience at GMU is consistent.  See David Warsh (here and here) for the backstory.   

The economics of vending machines

Japan has so many, but why?  You can cite love of gadgets, etc. but I want something more general.  After all, Japanese retailing has a very high ratio of small stores serving a local clientele; surely Japanese vending machines are another example -- albeit an extreme one -- of that more general trend.

First we must look to the shortage of storage space in homes.  I suspect few Japanese want to buy big piles of stuff at Costco.  So buy smaller "portions" and in the meantime the inventories are stored in the vending machines, where they are more or less at your disposal. 

Cars of course are another means of storage and also a way to transport goods in bulk (NB: you carless people have a hard time pigging out at the public library, you poor souls).  But most Tokyo residents don't use cars so again they buy goods in smaller numbers which again points us to the vending machine.  Buy one disgusting sweet fizzy juice, drink it on the spot, and walk to your nearest vending machine when you need another one.

You'll notice that vending machines are especially popular for canned and bottled liquids, where the ratio of storage and carry costs to per unit value is relatively high.

This article associates vending machines with the nomadic lifestyle.

The "afternoon effect" for artworks

One resilient puzzle identified in the literature is the “declining price anomaly.” This effect was identified by Ashenfelter (1989) and is an obvious repudiation of the law of one price. It refers to the observation that as an auction proceeds, the prices of the lots decline, even for identical goods (e.g., wines). Beggs and Graddy (1997) established the existence of the “declining price anomaly” for heterogeneous goods using data for Contemporary and Impressionist art auctions. This has generated great interest and a number of papers now report somewhat conflicting results in this respect, although the majority still seems to find evidence in favor of this anomaly (see Ashenfelter and Graddy 2003, and Ginsburgh and van Ours 2007.) In light of this controversy, it is of interest to investigate whether or not Latin American art auctions are also subject to the declining price anomaly or the so-called “afternoon effect” (“morning after effect” would be a more appropriate name in this context as Latin Art auctions occur in two parts, the first starting late in the day, say 7pm, and the second starting earlier the following day, usually 10am.) In line with previous research (Beggs and Graddy 1997), we find strong evidence that the “declining price anomaly” holds for Latin Art data, even after controlling for auction and artist unobserved characteristics (dummies) and a huge array of paintings characteristics, including reputation and provenance.

Here is the link and yes I do believe this is true.  I believe it is mostly neuroeconomics at work, namely that we are more excited by new offerings than by familiar offerings.  Similarly, a painting that has been "shopped around" usually goes for a lower price than a comparable picture coming on the market for the first time in many years; admittedly it is hard to segregate out the selection bias here.  So if the same Jasper Johns print is being auctioned at 10 a.m. and 1 p.m., some people just don't want to wait with their bids.  I wonder also if there is a theorem about how an asymmetric distribution of risk-averse bidders, fearing they might not get the work at all, could generate the same price pattern,

An alternative hypothesis -- likely true in part -- is that even "identical" artworks differ slightly in quality and the auction houses sell the better one first, if only to create a price precedent and excitement effect for the second one later in the day.