Re: In Praise of Pay Toilets
Is the reason most restaurants in the US don't have pay toilets the same as the reason that many grocery stores in the US don't have a bring your own bag/buy a bag policy? Both pay systems seem to be more common in Europe. Also, both the grocery stores and the types I restaurants that would seem most likely to have a pay toilet policy (fast food-type joints, I guess) seem to have low profit margins. Is there something that would cause a business that has low profit margins to have give aways. I would think that customers to either type of business would be very value orientented and the firms would do all they could to lower the price- i.e. no freebies. But, is it just the opposite, if a firm has small profit margins, it can't gain much from lowering the price any more, but can gain from promotional type things such as free bathrooms and free bags? Jason
Consumer Reports on Deregulation
The July 2002 issue of Consumer Reports (not yet on their website) has an article on p.30 on Deregulation with a summary Why consumers suffer most in a free market - and what you can do about it. Their strongest argument is a graph on p.30 on titled Prices: A long-term decline. Consumer prices often fell after deregulation. But inflation-adjusted prices were falling for decades before, typically at a faster rate. The chart shows prices for airlines, local telephone, long distance, cable TV, and electricity from 1950 to 2000, which are roughly supportive of their claim. Is there a rebuttal to this somewhere? Robin Hanson [EMAIL PROTECTED] http://hanson.gmu.edu Asst. Prof. Economics, George Mason University MSN 1D3, Carow Hall, Fairfax VA 22030- 703-993-2326 FAX: 703-993-2323
Re: Consumer Reports on Deregulation
Do they define their use of free market and deregulation? Has the deregulation talked about resulted in a freemarket? Bryan From: Robin Hanson [EMAIL PROTECTED] Reply-To: [EMAIL PROTECTED] To: [EMAIL PROTECTED] Subject: Consumer Reports on Deregulation Date: Mon, 10 Jun 2002 12:11:06 -0400 The July 2002 issue of Consumer Reports (not yet on their website) has an article on p.30 on Deregulation with a summary Why consumers suffer most in a free market - and what you can do about it. Their strongest argument is a graph on p.30 on titled Prices: A long-term decline. Consumer prices often fell after deregulation. But inflation-adjusted prices were falling for decades before, typically at a faster rate. The chart shows prices for airlines, local telephone, long distance, cable TV, and electricity from 1950 to 2000, which are roughly supportive of their claim. Is there a rebuttal to this somewhere? Robin Hanson [EMAIL PROTECTED] http://hanson.gmu.edu Asst. Prof. Economics, George Mason University MSN 1D3, Carow Hall, Fairfax VA 22030- 703-993-2326 FAX: 703-993-2323 _ Chat with friends online, try MSN Messenger: http://messenger.msn.com
RE: Consumer Reports on Deregulation
Also relevant is quality and availability of service. Previously prices may have been cheap/falling but the range of offering, customer treatment or availability may have constrained enjoyment of the service to a sub optimal level. Deregulation could/should change this. (I think it has in my limited experience) I'm also not sure to what extent the prices charged were also controlled by governments as a macroeconomic tool to reduce measures of inflation? Any thoughts? David Mitchinson +447956256281 -Original Message- From: [EMAIL PROTECTED] [mailto:[EMAIL PROTECTED]] On Behalf Of Robin Hanson Sent: 10 June 2002 17:11 To: [EMAIL PROTECTED] Subject: Consumer Reports on Deregulation The July 2002 issue of Consumer Reports (not yet on their website) has an article on p.30 on Deregulation with a summary Why consumers suffer most in a free market - and what you can do about it. Their strongest argument is a graph on p.30 on titled Prices: A long-term decline. Consumer prices often fell after deregulation. But inflation-adjusted prices were falling for decades before, typically at a faster rate. The chart shows prices for airlines, local telephone, long distance, cable TV, and electricity from 1950 to 2000, which are roughly supportive of their claim. Is there a rebuttal to this somewhere? Robin Hanson [EMAIL PROTECTED] http://hanson.gmu.edu Asst. Prof. Economics, George Mason University MSN 1D3, Carow Hall, Fairfax VA 22030- 703-993-2326 FAX: 703-993-2323
RE: Consumer Reports on Deregulation
Also relevant is quality and availability of service. Previously prices may have been cheap/falling but the range of offering, customer treatment or availability may have constrained enjoyment of the service to a sub optimal level. Deregulation could/should change this. (I think it has in my limited experience) Exactly the opposite of what happened in the formerly regulated markets I'm familiar with. With prices fixed at a level that gave most good companies very good rates of return they competed by increasing quality. Quality has declined most noticeably in air travel and the brokerage industry, but arguably in trucking and banking as well. I'm also not sure to what extent the prices charged were also controlled by governments as a macroeconomic tool to reduce measures of inflation? Any thoughts? Since the regulatory agencies tended to be captured by the regulated industry (or at least sympathetic) prices tended to be too high (thus the price declines) rather than too low. As someone else said, the counterfactual is everything. CR is comparing the price declines during the 50s, 60s and early 70s with the price declines in the late 70s, and 80s. Productivity growth was notably faster in the earlier period than the later period. Would prices have declined as much in the 80s in trucking airlines, and phone service if there hadn't been deregulation? From the studies I've seen I seriously doubt it. Of course not everybody's prices decline. Regulation did tend to set prices too low for many low volume markets. In those places prices have skyrocketed. I suspect that some of this is just price rising to meet marginal cost, but because these are also markets with substantial fixed costs (maintaining terminals, ticket agents etc.) there is probably also some element of natural monopoly pushing prices in these markets up above long-run marginal cost. I would guess that there are three factors that account for CR's anguish about deregulation: 1) Their sense of fairness is offended by the big price increases experienced in difficult to serve markets, 2) Coming from the upper middle class as they do, they put more value on quality and are less concerned about price than the marginal air traveler/bank customer/brokerage customer so they experience the change from high q high p to low q low p less favorably than the new people attracted to the market by the change, and 3) deregulating a monopoly may cause an increase in price and to some extent that is what deregulation did (perhaps most notably in the cable industry, small air markets, and certain types of phone service). With respect to 3) don't think I'm not aware of the competition that cable faces from satellite or how contestable air markets are. Imperfect competition and limit pricing still leave plenty of room for monopolistic distortion. I don't think that _the_ definitive study on the costs and benefits of deregulation has been done and I very much doubt that CR's study is it. After all, CR used to (still does?) insist that economists have to be wrong about the predictability of capital markets because there are numerous mutual funds that have had 5 or more years of ROR above the market average - - without asking how many would be expected on the basis of chance alone. Thus they used to endorse mutual funds with exceptional records which, of course, tend to be the ones with the riskiest strategies (and by the studies I've seen only infinitesimally better expected returns). Sigh... - - Bill Dickens William T. Dickens The Brookings Institution 1775 Massachusetts Avenue, NW Washington, DC 20036 Phone: (202) 797-6113 FAX: (202) 797-6181 E-MAIL: [EMAIL PROTECTED] AOL IM: wtdickens
Re: Consumer Reports on Deregulation
A few suggestions follow. for deregulation across several industries: Robert Crandall and Jerry Ellig, Economic Deregulation and Customer Choice (1996), Fairfax, VA: Center for Market Processes, George Mason University. This article has many useful references. for airline deregulation: Steven Morrison and Cliff Winston, The Economic Effects of Airline Deregulation (1986) Washington, DC: Brookings Institution. for railroad deregulation: General Accounting Office, Railroad Regulation: Economic and Financial Impacts of the Staggers Rail Act of 1990, Report RCED-90-80 (1990). Cliff Winston, et al., The Economic Effects of Surface Freight Deregulation (1990), Washington, DC: Brookings Institution. for cable deregulation (and reregulation): Tom Hazlett, Prices and Outputs Under Cable TV Reregulation, J. Reg. Econ. 12 (1997). Tom Hazlett and Matthew Spitzer, Public Policy Toward Cable Television, Cambridge: MIT Press (1997).
