Category: Market Structures

Air – Creating the Air Jordan

Air tells the story of Nike’s partnership with Michael Jordan and the creation of the Air Jordan brand. Nike beat their competitors in the race to sign Jordan to an endorsement deal by agreeing to a partnership rather than a standard endorsement deal.

In this scene, Matt Damon (Sonny Vaccaro) explains the idea of creating a brand around a player to Mather Maher (Nike Shoe designer Peter Moore). This business model was revolutionary and has been imitated by numerous companies.

Thanks to John Kruggel for the clip and summary!

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Air – The Deal

Air tells the story of Nike’s partnership with Michael Jordan and the creation of the Air Jordan brand. Nike beat their competitors in the race to sign Jordan to an endorsement deal by agreeing to a partnership rather than a standard endorsement deal.

In this clip, Matt Damon (Sonny Vaccaro) negotiates with Viola Davis (Deloris Jordan) over Michael Jordan’s contract. Vaccaro explains that players don’t get to keep a cut of the sales, but Jordan’s mother emphasizes that the Jordan brand will utilize her son’s name, image, and likeness and he deserves to profit from that use.

Thanks to John Kruggel for the clip and summary!

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The G Word with Adam Conover – Overwhelmed by Choices

Have you ever stepped foot in a grocery store and been immediately overwhelmed by all the choices you have about everything from chips to sodas? The paradox of choice is that we often believe having multiple options makes it easier to find the product we really want, but it turns out that having a lot of options makes it harder to figure out exactly which one we want and often leaves us unhappy with our choice.

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Community — Market Price

Troy and Abed are sitting at dinner in a fancy restaurant when the bill arrives at the end. Troy initially offers to pay for dinner because it was Abed’s birthday, but is shocked by the final total since so many things on the menu must have been listed as “market price.”

Restaurants often list menu items as “market price” because they may include item (like lobster or fish) that have a constantly fluctuating price. Instead of printing new menus to account for changing prices, restaurants will just list it at “market price.”

Thanks to Luke Starkey for the clip submission.

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After Life — Ordering a Kid’s Meal

In this clip, the main character, played by Ricky Garvais, is taking his nephew out to lunch. They decide to both order the fish sticks meal from the kids’ menu. When Ricky attempts to order this meal, the waitress informs him it is only for children. Although the café is practicing a common form of price discrimination, Ricky’s character is confused and argues he should be able to order the meal and pay a smaller price for a smaller portion. The server argues this is not true, and that the meal is made cheaper for children. The character claims his nephew is hungry and wants to eat two meals… much to the waitress’s chagrin.

This clip is an excellent display of price discrimination, the necessary condition of being able to segment the consumer base (by age- with visual confirmation), and a conversation/confusion around if different prices truly reflect different marginal costs of production.

Thanks to Sheena Murray for the clip submission and summary!

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Schitt’s Creek — Christmas Demand & Price Discrimination

The Roses are trying to buy a last-minute Christmas tree, but they’ve come to realize their options are limited. The shop owner knows demand has recently been higher because there aren’t a lot of trees available in the store. Raymond finds that the prices are higher than he was expecting and decides to leave.

The shop owner takes a few creative approaches to selling trees, including bundling air fresheners with purchase and offering a discount if people buy two trees. Price discrimination is a popular tool to increase output for a firm and sell products to people across the demand curve.

Thanks to James Tierney for the submission:

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Family Ties — Turtle Business

Alex Keaton talks to pre-schoolers about starting a business and taxes. It is a fun clip to show when introducing a discussion about taxes. To avoid any issues with political differences, I usually note beforehand that Michael J. Fox, who plays Alex, was a Democrat in real life but played a Republican on the show.

Thanks to Matt Rousu for the clip and description!

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Young Sheldon — Candy Entrepreneur

 

George has become quite the entrepreneur through arbitrage. First, he buys snow globes from a company going out of business to resell at a higher price than to his neighbors. Now, he realizes that he can buy candy in bulk and then sell it outside the vending machine to people looking for a cheaper option. Even though it’s against school rules, he realizes that the school’s monopoly power over the vending machines results in higher prices than what’s necessary.

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Young Sheldon — Snow Globe Arbitrage

George notices that the greeting card store downtown is going out of business and he sees this as a business opportunity! He believes that he can buy Texas-themed snow globes for $1 and resell them to his neighbors for $5. George is arbitraging the snow globes, buying low and selling high. He goes through some struggles at first, but finds out how to sell them by the end of the episode.

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Life in Pieces — Discounts & Sunk Costs

 

Tim tries to host a guys night and things don’t seem to be going his way. Beyond the awkwardness of just the two of them, the big pay per view fight lasts only a couple of seconds. While the two did get to watch the fight, which had a knockout, it wasn’t quite worth the hundred dollars they paid. Tim notes that he may be able to turn it off and get his money back. With a lot of experience goods, it’s not necessarily the actual outcome of the action that people care about. Tim and Matt did see a fight, so why is he so focused on getting his money back?

A second quick econ line occurs later when they sit down for dinner. Even though Tim isn’t eating any tacos, he notes that the cook is cheaper since he expects Matt to eat 25 or 26 tacos. This form of bulk discounting represents second degree price discrimination. With this pricing mechanism, the hope is to induce customers to purchase more than they would have (law of demand) even though making an additional taco doesn’t have the added cost of another cook.

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