Sunday, November 22, 2009

Buying the Marginal Vote

Economists say that prices are set at the margin. By that we mean that the last one purchased in the market sets the price. Apparently, the price for a vote in congress is falling. In July the price for a vote for the cap and trade bill in the House was $3.5 billion.

When House Democratic leaders were rounding up votes Friday for the massive climate-change bill, they paid special attention to their colleagues from Ohio who remained stubbornly undecided.

They finally secured the vote of one Ohioan, veteran Democratic Rep. Marcy Kaptur of Toledo, the old-fashioned way. They gave her what she wanted - a new federal power authority, similar to Washington state's Bonneville Power Administration, stocked with up to $3.5 billion in taxpayer money...

Yesterday, in the Senate, they only had to pay $300 million for the last vote.

To help secure her vote, Reid included a provision in the bill sought by Landrieu to provide increased Medicaid funds for states recovering from major disasters such as 2005’s Hurricane Katrina that devastated New Orleans and parts of Louisiana, Mississippi and Alabama. When the bill is closely examined, however, the provision provides immense financial support for only one state: Landrieu's Louisiana.

Landrieu defended the inclusion of the provision and said Republican critics who accuse her of selling her vote for $100 million are wrong and that she has the support of Louisiana Gov. Bobby Jindal (R) and Health and Human Services Secretary Kathleen Sebelius.

Then, in a statement sure to be repeated by Republicans endlessly over the coming weeks of Senate health care debate, the senator flaunted the inclusion of the provision. “I will correct something. It’s not $100 million, it’s $300 million, and I’m proud of it and will keep fighting for it,” Landrieu told reporters after her floor speech...

Economists debate whether deflation is a good thing or a bad thing. They tend to think it is a bad thing.

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Saturday, November 14, 2009

Pictures of Chinese GDP Growth

Two views of Chinese GDP growth.

The pretty one. HT: Marginal Revolution

The ugly one. HT: Coyote Blog

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Sunday, November 08, 2009

Branding Best Western

We just finished up monopolistic competition in class with a look at how firms differentiate themselves with branding. An article in today's paper looks at the branding problem at Best Western.

Cara Vickery posted a glowing online review of the Best Western Inn of Sedona after a three-night stay last month.

"I am somewhat of a snob when it comes to hotels," the Ohio woman said on TripAdvisor .com. "I was leery of a Best Western, but this exceeded my expectations."

Best Western President and CEO David Kong cringes when he hears raves like that. "It might be a compliment for the hotel, but it's not a compliment for the brand," he said. "How much business are we losing because the expectation is not set properly?"

The Phoenix-based chain, the world's largest by locations under one brand name, is weighing a controversial plan to erase traveler confusion and boost bookings and revenue.

Executives have proposed creating three tiers of Best Westerns based on their design and amenities to give travelers a better idea of what to expect at its 2,300 independently owned hotels...

Best Western's problem is that the reality is more diverse than the brand suggests. The proposed solution - three brands all including the name Best Western - looks like a non-starter to me. To differentiate the brand you need a new name for the higher end and perhaps another for the lower end. Otherwise, confusion will reign.