Archives for supply and demand



Banned Products, Available in Poor Countries

In a recent Harry Hole mystery novel, The Leopard, Jo Nesbø (an economist as well as novelist) has Harry ask someone, “Where would you go to get it [a particular anesthetic] now?” and is answered, “Ex-Soviet states. Or Africa….The producer sells it at bargain-basement prices since the European ban, so it ends up in poor countries.” When rich countries ban something, they increase its supply to poor countries that refuse to ban it.  Prices are lowered to consumers there.  Rich countries’ safety is enhanced, poor countries’ worsened, with the only consolation that consumers in poor countries become able to obtain the harmful substance at lower prices.  Are people in each country better off, worse off, or what?



Organ Donation Supply and Demand

My wife is helping with a local drive to get people to register to donate organs. We thought that, as a cancer survivor, she herself would not be allowed to register. Wrong. Anyone under age 85 can register, so long as their cancer is not active and they do not have a systemic infection of any kind.

The doctor who informed us says this increases the potential supply of transplantable organs. If the demand is high enough, and the patients sick enough, the doctors will choose to use a donated organ even if the transplantation risk from the particular organ is substantial. Thus, while fortunately the price system is not used explicitly in the transplantable organ market, the choice to allow more people to register and to compare the demand to the increased supply suggests economics is currently present in this market.



How Will Peanut Price Hike Impact Related Items?

General equilibrium ain’t just peanuts. With the tremendous shortfall in the peanut harvest (a decline of 17%) due to the unusually dry weather in peanut-growing states, people are expecting a rise in the price of this main input of peanut butter to cause supply to shift leftward. Jif peanut butter expects to raise its price by 30% starting in November.

I doubt that its sales will go down much—I think the demand for peanut butter is fairly inelastic. But what about related markets? If everyone likes peanut butter and mayonnaise sandwiches as much as I do—if peanut butter and mayonnaise are complements—then we’ll see a leftward shift in demand for mayonnaise, and its price will decline. Have I held too much of the ceteris paribus, or not enough? Where should one stop?



Sperm Bank Rejecting Redheads

A recent story in the NY Daily News reported that Cryos International, one of the world’s largest sperm banks, is refusing to accept donations from redheaded men.

Apparently, this is a result of a sharp increase in supply that the company needs to reduce before more donations are accepted. Like most temporary surpluses, this one will be removed, in this case probably not by the price system (although one can imagine that potential recipients, hearing of the surplus and being indifferent about their donor’s hair color, might offer Cryos a below-market price).

More likely, Cryos’ refusal to accept any more supply will cause the surplus to disappear, so that redheads’ donations will soon be accepted again.



Paris Under Siege: Why Were Cats Four Times the Price of Dogs?

In his discussion of the Siege of Paris 1870-71, David McCullough in The Greater Journey discusses the path of meat prices. One observer “considered cats ‘downright good eating,’ as apparently did many people. The price of a cat on the market was four times that of a dog.” Whether the price difference was really based on demand—differences in tastes for the two kinds of meat—or supply—is not mentioned in the book, but perhaps Parisians protected Fido less well than they protected Fluffy.

This illustrates a ubiquitous problem in discussing price differences: It’s easy to adduce a cause on one side of the market, but just as easy to bring up another cause on the other side of the market. I would bet on demand in this case, though, since it’s easier to protect Fido than a loose-running cat.



A Biblical Post

Photo: David Campbell 2 Kings VII discusses an incident in which the people of Israel are besieged and food prices are skyrocketing. A military officer scoffs when “a man of God” predicts that barley will soon sell for ½ shekel and fine flour for 1 shekel (very low prices). The officer is shortly trampled to […] Read More »



Why Is the German Economy Cranking?

What’s behind Germany’s economic success? It’s not a wirtschaftswunder; The Economist explains. Read More »



An E.R. Doc Learns the Economics of Street Drugs

An E.R. doctor in the Pacific Northwest who writes a blog called “Movin’ Meat” might seem an unlikely candidate to know the economics of street drugs. But since he treats overdoses, he’s learned a bit. Read More »