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The Elusive Profitability of Voluntary Pricing

TOTM WSJ has a fascinating story this morning about a group of restaurants in Utah, Washington, Colorado and other places adopting a completely voluntary pricing system. . . .

WSJ has a fascinating story this morning about a group of restaurants in Utah, Washington, Colorado and other places adopting a completely voluntary pricing system. No registers. No prices. No “suggested” prices and no tips. The business model is essentially to provide food and allow customers to put whatever they want in a lock box at the front of the store. This is similar to the former economist turned Bagel Man in Freakonomics who delivered bagels to DC area offices on a quasi-honor system.

Read the full piece here. 

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Antitrust & Consumer Protection

Zywicki on the Two-Income Trap Hypothesis

TOTM My colleague Todd Zywicki offers an empirical rebuttal to the Warren-Tyagi “Two Income Trap” hypothesis which asserts that families with two incomes end up more . . .

My colleague Todd Zywicki offers an empirical rebuttal to the Warren-Tyagi “Two Income Trap” hypothesis which asserts that families with two incomes end up more leveraged than families with single incomes and more susceptible to negative economic shocks than otherwise for a number of reasons, including, e.g. counterproductive bidding for housing, child care expenses, etc.

Read the full piece here.

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Financial Regulation & Corporate Governance

Shelf Space Payments and Retail Bargaining Power

TOTM At his new blog Management R&D, Luke Froeb writes about the strategy of downstream firms reducing capacity in order to increase competition among suppliers… Read . . .

At his new blog Management R&D, Luke Froeb writes about the strategy of downstream firms reducing capacity in order to increase competition among suppliers…

Read the full piece here

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Antitrust & Consumer Protection

Who Has the Moral High Ground Here?

TOTM Life in the inner city can be hard. Jobs are scarce, prices are high, and transportation is difficult, making it hard to travel significant distances . . .

Life in the inner city can be hard. Jobs are scarce, prices are high, and transportation is difficult, making it hard to travel significant distances to work or shop. So when major retailers announce plans to enter the inner city, hire lots of employees, turn their neighborhoods into shopping destinations (thereby encouraging the creation of more jobs and conveniences), and offer signficantly lower prices than are currently available, you’d think “moral” folks would be pretty happy.

Read the full piece here

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What’s wrong with what Eduardo Penalver thinks is wrong with property rights initiatives

TOTM Over at Co-op, guest blogger Eduardo Penalver posts this screed against property rights initiatives like Oregon’s Measure 37 (about which I blogged here) and Washington’s . . .

Over at Co-op, guest blogger Eduardo Penalver posts this screed against property rights initiatives like Oregon’s Measure 37 (about which I blogged here) and Washington’s proposed Initiative I-933.  To my mind he gets it pretty much completely wrong, so I thought I should weigh in.

Read the full piece here.

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Some Thoughts on Tradeable Gasoline Rights

TOTM Marty Feldstein has an interesting idea about how to reduce America’s oil consumption, but I’m not quite ready to sign on. In an op-ed in . . .

Marty Feldstein has an interesting idea about how to reduce America’s oil consumption, but I’m not quite ready to sign on.

In an op-ed in yesterday’s WSJ, Feldstein proposed a “cap and trade” system for gasoline. Under the proposed system, the government would set a limit on the amount of gasoline Americans could purchase annually and would then allocate rights to purchase that amount of gasoline.

Read the full piece here.

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What’s "Courageous" When It Comes to Taxing Investment Income?

TOTM Today’s New York Times accuses President Bush of getting things “exactly backwards” by exhorting Congress to demonstrate political courage by resisting the urge to raise . . .

Today’s New York Times accuses President Bush of getting things “exactly backwards” by exhorting Congress to demonstrate political courage by resisting the urge to raise taxes. The politically courageous move, the Times says, would be to raise taxes (i.e., to refuse to extend the 2003 cuts beyond their expiration date). In particular, the Times calls for brave lawmakers to eliminate the “special low tax rates for investment income,” which “overwhelmingly enrich the rich and will be even harder to justify in the years to come, when, by all reasonable estimates, the country’s financial outlook will have deteriorated further.” It was, the Times says, “Orwellian” for President Bush to suggest that courage would be required to extend the tax cuts on investment income.

Read the full piece here

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Backdating Options and Why Executive Compensation is Not All about Norms

Scholarship In this short essay, we take on some of the common claims surrounding the law and economics of the backdating of options. Most of these claims are rooted in the basic argument that backdating options amounts to concealment of compensation.

Summary

In this short essay, we take on some of the common claims surrounding the law and economics of the backdating of options. Most of these claims are rooted in the basic argument that backdating options amounts to concealment of compensation. While we agree that backdating may have amounted to a technical rule violation in some cases, there is actually no concealment and, in fact, backdated options are fully disclosed when granted, and their value incorporated into stock price. We also challenge a few other myths surrounding the practice of backdating options.

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Financial Regulation & Corporate Governance