Tag: competition

A Series of Unfortunate Events – Paid in Coupons

The Baudelaire orphans have been sent to the Lucky Smells Lumbermill and are being forced to work on the production floor. After a grueling morning of “log day,” the workers are given an entire five minutes for lunch, but the Baudelaire’s come to find that lunch consists of gum. Frustrated, they wonder if they can use their wages to buy something else, but it turns out that the Lucky Smells Lumbermill pays their workers in coupons rather than actual currency. The coupons don’t have any value since the workers don’t have any money to go out and buy things anyway. The workers also don’t have power to leave or demand better conditions because Lucky Smells is the only place to work in town.

When a single firm controls the labor market in a region, they are said to have monopsony power in the market. Monopsonies can pay workers below competitive wages because workers are unable to find alternative employment opportunities. In this case, the Lucky Smells Lumbermill pays them almost nothing since the coupons can’t really be redeemed anywhere.

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Horrible Bosses 2 — Wealth Creates Wealth (NSFC)

 

Nick, Kurt, and Dale finish production on their new product, the Shower Buddy. After being asked to produce 100,000 units to be sold to Bert Hanson and his son Rex. The three take our a half million dollar loan and start production, but since they have never done this before, they don’t have the Hansons commit to paying for a portion of their order. Hanson cancels his order with a week before the loan is due in an attempt to buy their company in foreclosure. One line is especially poignant as Hanson notes that hard work doesn’t create wealth, wealth creates wealth. One of the issues with wealth inequality is that it’s not a reward for hard work, but rather a reward for previous work. Vox covered the difference between wealth and income inequality in a nicely illustrated video.

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Saturday Night Life — Toys ‘R Us

When teaching students about the different types of firm structures, we always discuss monopolistic competition and how firms try to differentiate their products to get positive economic profits. This short clip shows how Toys R Us is staying open for 87 hours straight to differentiate itself from other toy stores around the holiday season.

Thanks to James Tierney for the clip and description.

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John Stossel — The Fight Against Food Trucks

John Stossel, through ReasonTV, looks at the regulations behind the food truck industry. From a competitive market standpoint, food trucks have the ability to respond to high demand areas by relocating at any given moment. For brick-and-mortar businesses, however, food trucks enter the market as a low-cost competitor and steal customers from permanent restaurants. Many cities in the United States have setup regulation limiting the location of food trucks or the hours they may operate. This rent seeking behavior, however, limits the amount of options available to consumers in the name of “fairness.”

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Always Sunny — Where it Hurts (NSFC)

The gang decides to try and start selling their own gasoline because they are tired of the high prices the local gas station is charging. The three come into the gas station to let the owner know that he’s about to see the pain of a free market because they intend to take customers away from him. Free markets allow for easy entry and exit of competitors, which should drive down prices and profits.

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Moscow on the Hudson — Coffee Aisle

 

Robin Williams stars as a defected Soviet living in the United States in Moscow on the Hudson. His shift from communist markets to American-style markets is a bit overwhelming as he visits a grocery store to find the coffee aisle. After realizing that there’s no line to buy coffee and that there are a dozen varieties of coffee, he passes out in the middle of the store.

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Two and a Half Men — Massage Competition

Alan needs some extra income and decides to offer massages at the mall. He quickly finds stiff competition and gets into a price war with another masseuse. The price war eventually gets so low that the entrant decides to exit the market.

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Pixar — One Man Band

 

I use this clip to introduce the concept of monopolistic competition in a market place and how demand shifts when close substitutes enter a market.

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Going Places (1948)

 

From YouTube:

Cold War cartoon defending the profit motive against anti-capitalist critics. The second of seven smart-looking animated shorts in the “fun and facts about American business” series. Its subject is “the profit motive,” and it stars “Freddie Fudsie,” a lazy soap maker who just wants to go fishing. He invents bar soap, makes some money, and is about to retire in peace and quiet when a sexy lady (the Profit Motive) walks by and Freddie — who suddenly needs more money to win her affection — never sees a fishing hole again. But that’s okay, because “the profit motive has been the driving force behind the growth of American industry” and “will make a better life for the children of tomorrow.”

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