Ask an Economist

Dose any branch of the field of economics have a term for when producers cease to compete at the production level, but continue to compete fiercely in marketing. The example I have in mind for this is the sports shoe industry (Rebok, Nike, Adidas, etc.), where production has been subcontracted to East Asian companies that specialize in finding the lowest cost producers in China, Vietnam, Indonesia, etc., where the same manufacturer can be in the business of making shoes in the same factory for several companies (Rebok, Nike) at the same. And what precisely are the theoretic conditions that enable this to happen? Are production costs that their absolute lowest so that no production competition is possible?

What happens as new products enter the market? What factors determine gaining market share from existing products? For example, as nylon and polyester entered the market in the 1940s demand for wool decreased drastically. However, in cases of new, similar products, this isn’t always the case. Another example, “milk” like almond, soy, and coconut milk have taken away from conventional dairy milk; however, it’s certainly not as detrimental as synthetic fiber was for wool. How can we determine the factors that will influence consumer buying decisions as consumers have more choices?

There is a huge trend in uploading personal receipts to various apps, either for fundraising or rebates. Moreover, businesses are uploading invoices and such to be processed digitally for cost analysis. Who reads these receipts and invoices? Is it being done through automated technology or are there low-wage workers in India doing this for hours on end? I'm not sure how I feel about supporting technology that creates horrible, repetitive, and invisible jobs in other countries. I feel like we continually take advantage of workers in developing countries.

I work with a US company that manufactures vitamin/mineral supplement for grazing animals, cattle, sheep, and horses. We have been approached about expanding our operations and extending our technology into Australia. But, I have significant reservations about the ability of rancher in Australia to spend any resources beyond absolute survival. Any responses or suggestions to find information regarding the financial viability of Australian ranchers would be appreciated.

Cheers,

Abe

Disinflation describes a lower inflation rate than the previous month, using YoY values. Does it make a different interpretation if the MoM value decreases or increases? I have seen a decrease in the MoM value corresponding to a decrease in the YoY inflation as well as a decrease in a MoM value corresponding to an increase in inflation YoY. Does the MoM value tell you anything about the YoY value? I used to think the MoM value described accelerating or decelerating of the YoY inflation/deflation. Can you please elaborate on the relationship between MoM and YoY values, if any? Thank you.

I understand that the balance of payments should be equal, and that the Current Account should equal the Capital Account. The U.S. imports more than it exports, so other countries have more of our currency and can use it to buy assets. What I don't understand is how that USD is categorized in the interim. If Company U.S. buys $1 million worth of goods from Company China, how is that cash categorized while it remains unspent in Company China's bank account? What if they just let it sit there and continue to save that cash, wouldn't this throw off the balance of payments and cause the Current Account to be greater than the Capital Account due to the unspent cash?

Thank you!

Dear Economists,

I recently had an argument in my fantasy football group that I believe an economist can answer. I need to define some terms and give some background before I get to the question.

I am in a 12 team league and we conduct a snake style draft every year to pick our players. A snake style draft is one in which teams are assigned a draft position and the draft is conducted 1-12 in the odd numbered rounds and 12-1 in even numbered rounds. Our rosters consist of 16 players. Every year your roster completely resets and we redraft in reverse order of standings (meaning that the team that finished last picks first and the team that finishes first picks last) with the following exception. You are allowed to keep up to 2 players, one player that you drafted (class B) and one player that went undrafted the previous year (class C). Provided that they are on your roster on Thanksgiving.

Players can be divided as follows:

Class A1 players cannot be kept by definition, and cannot be dropped from your roster.

Class A2 players cannot be kept, but can be dropped from your roster.

Class B players can be kept by giving up a draft pick that is 3 rounds earlier than where they were selected the year prior. i.e. If they were selected in the 5th round you would have to give up a 2nd round pick.

Class C players can be kept by giving up a draft pick that is three rounds later then where they are projected to be picked that year. i.e. If they are projected to be picked in the 5th round you have to give up an 8th round pick to keep them.

Generally speaking, Class A1 players are more talented than Class A2 players, who are more talented than Class B players, who are more talented than Class C players. Also, it is impossible to know how good a player will perform in future years, or what their projected draft position will be because those projections are not released until July of the following year.

As a result of these rules I adopted the following strategy after I was eliminated from this year's playoffs. I dropped all Class A2 and B players from my roster and picked up 16 Class C players using the following logic. Class A players are worthless for future years because I will lose them for nothing when the rosters reset. Class B players require me to pay a premium to keep them, and because they would need to vastly overperform expectations they are not worth the investment. Class C players are the least talented of the bunch, but I will have 16 chances to pick one that is in a good position to perform well, and I will get that player at a discount because I will be able to draft them later than when the market says they should be drafted. The other teams do not acknowledge this as a legitimate strategy. I believe that this illustrates relative value (valuable players that have no value considering my circumstance), opportunity costs (roster spaces that have worthless players but could have players with some value), and expected value (players who are worth very little now, but may have value later and can be drafted at a discount).

What do the economists think of my strategy?

As a post script, I tried to trade Class A players for Class C players before dropping them, but no team would trade with me because they thought I was giving up too much value for nothing.

I am familiar with Karl Fox et al. "functional economic areas" framework of regional modelling. I am also aware of REMI products. These latter models are widely used by state and local governments. But I am not aware of the availability of computer models that would use functional economic areas per se. Can you inform me if there are such models that might be an alternative to REMI? Thank you.

At the risk of sounding like a socialist, I wanted to ask about potential economic potential of a maximum wage. Sweden tried it with a 12:1 ratio, failed sadly, but I wondered if a less extreme idea would be viable. Say 100 times the minimum wage is the most anyone could earn in gross taxable wages. I'd probably say it would be fair to exclude athletes and entertainment industries. It would be a hard sell for congress so this is purely a theoretical question. Short of how the CEOs would feel, what is the viability and potential impact on the economy?

I received my undergraduate degree in economics, with a hard focus on higher level and more mathematics. I did well with most everything up to advanced mathematics and real numerical analysis. I struggled greatly with those, much more than the others - and I'm not sure if I learned them well at all. So, with that kind of experience, should I consider applying to PhD programs in economics or calling it off, as all of my advisers told me "If you can't handle this, you won't make it to Christmas in a PhD program"?

Are there any positive effects of applying tariffs? Everything I hear in the news makes them seem like they are an objectively bad idea and are always a poor choice. If they’re so bad, why does China retaliate with their own tariffs when we apply tariffs to them? Would it not be better to just shrug them off and ignore them? Or respond in some other way?