Newmark's Door

Attempts to answer two interesting questions

Both are NBER working papers.

"Sales Mechanisms in Online Markets: What Happened to Internet Auctions?"

Consumer auctions were very popular in the early days of internet commerce, but today online sellers mostly use posted prices. Data from eBay shows that compositional shifts in the items being sold, or the sellers offering these items, cannot account for this evolution. Instead, the returns to sellers using auctions have diminished. We develop a model to distinguish two hypotheses: a shift in buyer demand away from auctions, and general narrowing of seller margins that favors posted prices. Our estimates suggest that the former is more important. We also provide evidence on where auctions still are used, and on why some sellers may continue to use both auctions and posted prices.

"If Technology Has Arrived Everywhere, Why has Income Diverged?"

We study the lags with which new technologies are adopted across countries, and their long-run penetration rates once they are adopted. Using data from the last two centuries, we document two new facts: there has been convergence in adoption lags between rich and poor countries, while there has been divergence in penetration rates. Using a model of adoption and growth, we show that these changes in the pattern of technology diffusion account for 80% of the Great Income Divergence between rich and poor countries since 1820.

"That's Not Entrepreneurship"

Professor Munger makes the best use of Lloyd Bentsen's line that I've seen. 

The Law of Unintended Consequences strikes one more time

Megan McArdle: "How the IRS Wrecked Your Pension".

Work economics teachers need to do more of

Almost every week there is some new awful risk the media warn us of, awful because the sellers are "unregulated". Two examples;

"Wild, unregulated hacker currency bitcoin getting close to mainstream". (I'll admit "wild" is a nice touch.)

"Think Those Chemicals Have Been Tested?"

Unlike pharmaceuticals or pesticides, industrial chemicals do not have to be tested before they are put on the market. Under the law regulating chemicals, producers are only rarely required to provide the federal government with the information necessary to assess safety.

An answer--which needs to be taught more, and more forcefully--is nicely expressed in a column by George Mason economist Donald J. Boudreaux: "Competitive regulation".

The demand for government regulation springs from the lack of understanding that markets are amazingly proficient at regulating themselves through the competitive process. This process involves firms' competition for customers, workers, financing and suppliers.

See also Steven Greenhut's "Free Markets Are More Important Than Safety Regulations".

"The Minimum Wage Delusion, And The Death Of Common Sense"

Nice, short, non-technical summary of some of the important evidence.

"Here's Why So Many Wealthy Athletes Wind Up Broke"

A big one is that they tend to avoid paper assets--certificates of deposit, index funds, bonds--in favor of tangible ones. 

"Newegg nukes 'corporate troll' Alcatel in third patent appeal win this year"

Kmart, QVC, Lands' End, Intuit, Zappos, Sears, and Amazon all settled. Newegg and Overstock.com didn't and they won convincingly. 

"The Upper Class and Wealth Inequality in Sweden"

Tell me you would have guessed this. I wouldn't have.

Sweden is viewed as an egalitarian utopia by outsiders, but reality is complex. In some ways Sweden has less social equality than the United States. While the American upper class is largely meritocratic, the upper class in Sweden are still mostly defined by birth.

Who says big macro models are dead?

Nancy Pelosi apparently has one:

"Many of the initiatives that he passed are what are coming to bear now, including the Affordable Care Act," Pelosi said in an interview with MSNBC's Chris Hayes. "The Affordable Care Act is bringing the cost of health care in our country down in both the public and private sector. And that is what is largely responsible for the deficit coming down."

I hope some enterprising reporter asks her for her GDP and S&P500 predictions soon.

"Drunk [repeatedly] sounds alarm"

Where some NYC tax dollars go.