Gender-pricing discrimination

The NYC Department of Consumer Affairs is on the case, the WSJ reports: City Nails Sex-Based Pricing.

Among the targets are salons that charge men and women differently for manicures and haircuts. But are those really the same products?

""It's ridiculous. I have some guys who need to come in every two weeks," said Ania Siemieniaka, the owner of Freckle Skin and Hair, which had to pay $175 for a violation. "If I raise my prices, I'll lose all my male customers."

"The city's Department of Consumer Affairs began stepping up enforcement of the law last year, when it issued 580 gender-pricing violations to businesses, more than double the 212 doled out the year before.

"We wanted to really send a strong message to businesses about this kind of illegal pricing, so we did a very focused sweep over the course of the year," said the department's commissioner, Jonathan Mintz. "That sweep was largely targeted at salons and barbershops and laundry and dry cleaning."

"Nearly all of the violations were the result of sweeps rather than complaints, said Mr. Mintz, because businesses and industry groups weren't correcting the practice on their own."
********

Here are earlier posts on a related topic: "Girl taxi" and "Ladies Nights", and The wheels of justice and Ladies' Nights

2-Tier Tuition at a community college?

The NY Times reports on what some are finding a repugnant transaction, and others see as the only way to avoid further cuts: 2-Year College, Squeezed, Sets 2-Tier Tuition

"SANTA MONICA, Calif. — For years now, administrators at the community college here have been inundated with woeful tales from students unable to register for the courses they need. Classes they want for essential job training or to fulfill requirements to transfer to four-year universities fill up within hours. ...

"Now, though, Santa Monica College is about to try something novel. This summer it will offer some courses for a higher price, so that students who are eager to get into a particular class can do so if they pay more. ...

"Since 2009, enrollment in California community colleges has fallen by 300,000 students, to 2.6 million, and many believe the difficulty of registering for classes is the most important deterrent.

"For generations, community colleges have been seen as a social equalizer, providing a relatively inexpensive education for poor students, immigrants and others without the skills, grades or money to attend a four-year institution.

"So the two-tiered tuition structure being proposed here is raising eyebrows, and fundamental questions, about the role and obligations of community colleges. Will the policy essentially block some of the people it is designed to benefit? Many students believe the new policy — if the state does not block its implementation, which it could yet do — will unfairly exclude the poorest students and create a kind of upper and lower class of students.

"A financial squeeze since the recession led first to a reduction of federal and then state financing for colleges and universities. Since 2008, California’s community college system has lost $809 million in state aid, including $564 million in the most recent budget, even as more students than ever before try to enroll.

"Currently, each community college class costs $36 per credit hour. Under Santa Monica’s plan, the more expensive courses would cost $180 per credit hour — just enough to cover the college’s costs, Dr. Tsang said.

"While the college is still ironing out the details, it expects to offer about 200 courses at the higher tuition price, in addition to hundreds of regularly priced courses. College officials say that nearly every class is filled to capacity and that they are asking departments to choose which courses have the highest demand so they can offer more of those — typically basic courses in English, writing, math and science.
...
"Janet Harclerode, an English instructor and president of the college’s Academic Senate, said that many professors viewed the new plan as having a “real ick factor,” but that few saw any real alternative. Many instructors have already accepted extra students in their classrooms, even allowing a few to sit on the floor when seats were scarce.

“We hope that this is just a stopgap measure, before taxpayers step up and the state really starts to reinvest in the colleges,” she said."
**********
In the wake of the initial announcement, Chancellor Asks Community College to Hold Off on Tuition Plan

"The chancellor of the California community college system has requested that Santa Monica College hold off on its plan to offer popular courses with higher tuition this summer, saying that the legality of the program is still in question. 

 "The request came a day after a student protest at the college ended with a campus police officer spraying dozens of people with pepper spray, several of whom suffered minor injuries. Many students and faculty members have criticized the plan saying it violates the long tradition of community colleges as havens for those without the means to afford four-year colleges.

 "The chancellor, Jack Scott, had already made it clear that he was wary of the community college’s plan to charge more for some popular classes and said it could violate state education codes. He has asked the state’s attorney general for an opinion, which he expects to receive in the next week."

***********
Update, April 19: Chancellor’s Office Says Santa Monica College’s 2-Tier Pricing Plan Is Illegal

SF parking meters

 SFPark.org in the NY Times: A Meter So Expensive, It Creates Parking Spots.

Previous posts on congestion pricing and parking generally.

Parking

I always knew that parking is a sexy topic*, but it takes a first rate journalist like Leon Neyfakh at the Boston Globe to explain clearly the kinds of things that excite economists: The case for the $6 parking meter

"For many people, what’s disconcerting about demand-based parking is the same thing that excites economists: It introduces market forces to an aspect of public life that historically has been largely protected from them. Like highway tolls that go up during rush hour, or the “congestion fees” some crowded cities have imposed, the Shoup model of street parking is part of a broader conversation about the trade-off between efficiency and equal access — and about what aspects of our lives should be treated as commodities as opposed to inalienable civic resources."


The late Clark Kerr on the subject: "The three purposes of the University?--To provide sex for the students, sports for the alumni, and parking for the faculty."

Dating as a two sided platform

From a new Wall Street dating website:

"Ladies pay $15/month membership fee and are allowed to browse and contact as many men as they desire. Gentlemen can browse as much as they want and are offered “Spark Packs” for $15 which allows them to contact 5 ladies of their choice. This way Ladies receive meaningful interactions from Gentlemen that are genuinely interested, while Gentlemen no longer need to spam dozens of profiles to get a response."

http://dealbreaker.com/2011/10/its-about-ambition-and-personality-not-cash/


HT Eduardo Azevedo

Matching and Price Theory

That's the name of a conference being held at the Milton Friedman Institute: Matching and Price Theory, May 6-7, 2011

Friday, May 6:
9:00 - 9:50 am The College Admissions Problem with a Continuum of Students
Eduardo Azevedo (Harvard University) and Jacob Leshno (Harvard University)

9:50 - 10:40 am Stability and Competitive Equilibrium in Trading Networks
John Hatfield (Stanford University), Scott Kominers (Harvard University), Michael Ostrovsky (Stanford University), Alexandru Nichifor (University of Maastricht) and Alexander Westkamp
(University of Bonn)

10:55 - 11:45 am Sorting and Factor Intensity: Production and Unemployment across
Skills, Jan Eeckhout (University of Pennsylvania) and Philipp Kircher (London School of Economics)

11:45 - 12:20 pm Discussion led by Eric Budish (University of Chicago)

12:20 - 1:50 pm Lunch

1:50 – 2:40 pm Hedonic Price Equilibria, Stable Matching, and Optimal Transport: Equivalence, Topology, and Uniqueness, Pierre-André Chiappori (New York University), Robert McCann (University of Toronto), and Lars Nesheim (University College London)

2:40 – 3:30 pm Distinguishing the Payoffs of Upstream and Downstream Firms in Matching Games, Jeremy Fox (University of Chicago)

3:30 – 4:05 pm Discussion led by Ariel Pakes (Harvard University)

4:20 – 5:10 pm Strategyproofness and Manipulability in Large Economies, Eduardo Azevedo (Harvard University) and Eric Budish (University of Chicago)

5:10 – 5:45 pm Discussion led by John Hatfield (Stanford University)

Saturday, May 7:
9:00 - 9:50 am Decentralized Matching with Aligned Preferences, Muriel Nederle (Stanford University) and Leeat Yariv (California University of Technology)

9:50 - 10:40 am TBA, Ilya Segal (Stanford University)

10:40 – 11:15 am Discussion led by Alvin Roth (Harvard University)

11:30 - 12:30 pm Panel and Audience Discussion on Open Questions, Gary Becker (University of Chicago), James Heckman (University of Chicago), Paul Milgrom (Stanford University) and Alvin Roth (Harvard University)

Register online here

Dating fees added to the British inflation index

Along with apps, natch. The Financial Times reports, Apps and dating fees added to inflation basket

"Smartphones and the applications that run on them have been added to the basket that makes up the consumer price index, along with fees paid to dating agencies.

"The Office for National Statistics on Tuesday unveiled changes to the composition of its CPI and retail price index baskets, intended to represent a “typical” shopping basket for households – an exercise it undertakes every year. Because shopping habits change, items are constantly being added and removed from both indices.
...
"Fees paid to dating agencies have been added to reflect the growing use of internet services to find a partner..."

Matching is everywhere...

The wheels of justice and Ladies' Nights

A year ago today I blogged about a lawyer who objected to differential pricing for the two sides of a matching market: he didn't like "ladies' nights" at bars, and brought suit to end them.

Today, over at the Volokh Conspiracy, chief conspirator Eugene Volokh points us to the resolution of the case, which was rejected by the district court, and has now been confirmed on appeal to the Second Circuit. Here's the court's opinion.

The opinion begins "The facts of the case are straightforward. During “Ladies’ Nights,” several New York City nightclubs (“Nightclubs”) charge males more for admission than females or give males less time than females to enter the Nightclubs for a reduced price or for free. Den Hollander, who was admitted to the Nightclubs under this admission regime, attributes these pernicious “Ladies’ Nights” to “40 years of lobbying and intimidation, [by] the special interest group called ‘Feminism’ [which] has succeed in creating a customary practice . . . of invidious discrimination of men.” Den Hollander filed suit, on behalf of himself and others like him, alleging violation of his equal protection rights pursuant to 42 U.S.C. § 1983."

As it happens, the case doesn't depend on any economic arguments, but on the fact that nightclubs aren't state actors...

Price gouging and proposed legal remedies

Some more interesting posts on price gouging from Michael Giberson at Knowledge Problem :

A private right of action on price gouging and Price gouging in Haiti.

31 States have laws against price gouging

So reports Michael Giberson at KP, based on a Master's thesis by Cale Wren Davis, supervised by Randy Rucker at Montana State. The thesis is here: AN ANALYSIS OF THE ENACTMENT OF ANTI-PRICE GOUGING LAWS.

I'm struck by how relatively recent anti price gouging laws are: 27 of the 31 were passed in the 1990s or 2000s, with the rest passed in 1979 (NY), 1983 (HI), 1986 (CT), and 1986 (MS).

The laws come into force when some kind of state of emergency has been declared, and most set a price ceiling at "pre-emergency prices," although some set a ceiling higher than that, the highest being 25% above pre-emergency prices.

"Girl taxi" and "Ladies Nights"

The WSJ reports 'Girl Taxi' Service Offers Haven to Beirut's Women .

"...these days the city's transport staple is facing some serious competition from a growing army of female taxi drivers, dressed in stiff-collared white shirts, dark shades, pink ties and small pink flowers tucked into their flawlessly coiffed hair.
All of them drive for Banet Taxi, or "girl taxi" in Arabic. It is Lebanon's first cab service for women, by women. You can't miss the company's signature candy-pink cars."
...
"The company is part of a regional trend. Entrepreneurs across the Middle East have recognized the business potential in offering secure transportation options for women. Banet Taxi follows on the heels of successful women-only transportation models in Dubai, Tehran and Cairo."

..."It is the promise of a safe and uneventful ride that attracts a wide range of female passengers: older women who want a quiet drive, young women out partying until late at night, and even preschoolers put in the cars by their teachers.
Passengers' reasons for choosing Banet are based, in part, on their cultural and religious backgrounds. Beirut's population breaks down roughly into thirds, Christian, Sunni and Shiite. Conservative Muslim women might take Banet Taxi to accommodate rules against traveling with unknown men. Others just want to put comfort and safety first."

While single sex markets thrive in some venues, others use gender as a basis for discriminatory pricing, with different prices for men and women. Economists mostly don't find this malign in two-sided platforms like those that provide dating opportunities, since they need to attract both genders in comparable proportions. So, for example, some clubs have 'ladies nights,' in which women are admitted for free or at a lower cover charge.

One lawyer is very annoyed by this: N.Y. Lawsuit Calls 'Ladies' Night' Discriminatory . However Roy Den Hollander "ANTI-FEMINIST LAWYER"--N.Y. Times seems to be mostly losing these cases, and has drawn this unsympathetic portrait from the New Yorker: Hey, La-a-a-dies!

Hotel rooms and discounts

I just received an ad by email for a prizewinning hotel in Boston. When I went to their website, I found that their seasonal room rate for a weekday in late September for two adults is $285.00 Their site also makes it easy to check the special rates they give to those who are members of the AAA, AARP, and the U.S. Government. For the same day and same room, those rates were, when I checked, respectively, $355.50, $355.50, and $306.00 . Gotta love that government discount.

Chicago parking: private metering, public/private enforcement

The City of Chicago recently sold the right to manage its parking meters for the next 75 years to a private company, for a payment of $1.15 billion. The city retains the right to make parking laws and enforce them, although some aspects of enforcement are now shared. Not surprisingly, there's some trouble in the Windy City: Long a Driver’s Curse, Chicago Parking Gets Worse .

Not only have meter rates gone up, enforcement seems to have become more aggressive. Aside from the fact that Chicago looks to parking fines for revenue in tough economic times, there appear to be market design reasons for this.

Here is the agreement between the city and the contractor. Section 3.2e on page 40 reveals that the contractor as well as the city may issue tickets to illegally parked cars at meters.

So now there are two motivations for issuing tickets; the city issues them to raise revenue from parking fines and to enforce the parking laws, and the contractor issues them to increase meter revenue by discouraging people from parking without paying or parking after the payment has expired.

The city can raise revenues from fines by aggressively enforcing laws, e.g. about how many inches you may park from the curb. The contractor can raise revenues by ticketing cars promptly after meters expire. (Both the city and the contractor have an interest in enforcing the laws that say you must park between the lines.)

Some problems with getting new meters (which accept credit cards) to work properly have compounded the angst.

What to do? Carry lots of quarters when you drive in Chicago, at least until things settle down.

Private sales of artworks, in a down market

Auctions are good for price discovery, and price discovery is particularly important for "common value" goods, i.e. goods whose value to each buyer may be substantially influenced by what other buyers are willing to pay. So, what should you do if you want to unload a common value asset but want to avoid disseminating potentially bad news about what it might be worth? The NY Times reports More Artworks Sell in Private in Slowdown .

"During good times, an auction is the obvious choice for any collector wanting to sell a work of art. But as the recession takes its toll, many collectors have changed strategies and retreated to the more hidden, and potentially less lucrative, world of private sales.
"For many sellers, the driving factor is fear. Fear that their friends will discover they need money. Fear that if a Picasso or Warhol, Monet or Modigliani does not sell at auction, it will be considered yesterday’s goods.
If they do not have to, fewer collectors are putting their holdings up for auction at Sotheby’s and Christie’s, where prices and profits have plummeted. But executives at both houses say business in their private-sale departments has more than doubled in recent months. "
...
" “The game has definitely shifted,” said Christopher Eykyn, a former head of Impressionist and modern art at Christie’s who is now a dealer in New York. “A lot of clients don’t want to be seen selling, so the private route is suddenly more attractive.” "
...
"There are exceptions, of course. Estates continue to go to auction because executors have a fiduciary responsibility and prices are rarely challenged after public sales.
For the auction houses, private sales are lucrative and inexpensive. Generally Sotheby’s and Christie’s charge 5 to 10 percent of the purchase price of an artwork, depending on its value and the agreement with the seller. (If a work goes to auction the houses charge sellers 25 percent of the first $50,000, 20 percent of the next $50,000 to $1 million and 12 percent of the rest.) Money earned from private transactions comes cheap, without expenses like advertising, insurance and shipping associated with auctions.
The dismal sales in New York in November, when night after night paintings by Monet and Matisse, Bacon and Warhol went unsold, meant big losses for Sotheby’s and Christie’s, which had a financial interest in most of this expensive art in the form of guarantees, undisclosed sums paid to sellers regardless of a sale’s outcome.
After the fall auctions, both houses immediately began changing the way they conduct business. In addition to announcing hundreds of layoffs, with perhaps more to come, they mostly halted the practice of guarantees and stopped giving consignors a cut in the fees they charge buyers. The days of publishing luscious catalogs have ended as well.
For their part, dealers say that their phones started ringing after Sept. 15, the day Lehman Brothers filed for bankruptcy. “It’s been pretty steady ever since,” said Steven P. Henry, director of the Paula Cooper Gallery in Chelsea. He said he had been getting inquiries about selling art from people who had investments with Bernard L. Madoff, or who had seen the value of their stock or real estate assets collapse."

Real estate auctions for price discovery

Sales by auction are coming to the new condo market in New York City: And Do I Hear $2 Million? No? $1 Million? Sold!

"Real estate auctions, rarely used in New York, have the potential to both move property and indicate to reluctant buyers what the true market prices are. Given the current sales drought, even a handful of auctions could reset prices for new condominiums citywide, said Jonathan J. Miller, the president of Miller Samuel, a Manhattan research and appraisal company. He said he expects the auctioned properties to sell for 40 to 45 percent below the asking prices of the first quarter of 2008, when the market peaked"
...
"In the auctions run by Accelerated, only a portion of a building’s unsold units are sold in one swoop, to avoid depressing values more than necessary. The remainder are marketed the traditional way, at the new, lower auction prices. "
...
"Auctions have succeeded in loosening other battered markets, like South Florida. In two held there last fall by Accelerated, 30 to 40 units in partly sold developments went for about half their peak prices. The developers say sales have picked up since then, at prices slightly below those received at auction. "

The real estate auction firm mentioned in the article is Accelerated Marketing Partners, of Boston.

Market for used books

The easy availability of internet shopping for used books hasn't just affected used book stores, it is having an effect on the sale of new books as well, much like internet downloading of music affects sales of recorded music. Here's a story from the NY Times: Bargain Hunting for Books, and Feeling Sheepish About It . It makes the point that people can (and do) now sell relatively new books once they have read them, and that this impacts stores that sell new books, and of course authors, since neither get a share of resales. Increasing the thickness of the used book market increases the 'velocity' of a book, i.e. the rate at which new books change hands. Each copy of a book gets more readers, but each title sells fewer new copies.

"A book search engine like ViaLibri.net can knit together 20,000 booksellers around the world offering tens of millions of nearly new, used or rare books."

"Andy Ross, the former owner of Cody’s, told me that buying books online “was not morally dubious, but it is tragic. It has a lot of unintended consequences for communities.”
Mr. Ross said he realized that Cody’s was doomed when he noticed that in the last year he hadn’t sold a single copy of that old-reliable for undergraduates, Kant’s “Critique of Pure Reason.” Students presumably were buying it online. Sales of classics and other backlist titles used to be the financial engine of publishers and bookstores as well, allowing them to take chances on new authors. Clearly that model is breaking. Simon & Schuster, which laid off staffers this month, cited backlist sales as a particularly troubled area. "

Illegal cartels and the prisoner's dilemma

Paraffin wax is a humble byproduct of oil refining, and the EU's competition commission recently fined a passel of big oil refiners for having maintained a paraffin cartel that illegally coordinated prices. Here's the story: Inside Europe’s High-Living Wax Cartel.

The cartel seems to date from the 1970's, so it was quite long lived. But when it collapsed, it collapsed quickly, because of the prisoner's-dilemma way the anti-cartel laws are written and enforced.

"In the paraffin case, as in others, some of the biggest offenders walked off with no, or relatively small, fines because they were first in the door with information implicating less-involved conspirators."
...
"By late February 2005, the cartel started to fracture. It gathered for what would be its last meeting in the brightly colored four-star Hotel Madison Residenz in Hamburg but was unable to come to an agreement on prices.
Three weeks after the Hamburg meeting, the cartel was shattered.
Shell, facing $360 million in fines for its participation in other cartels — involving synthetic rubber and bitumen, a thick form of petroleum — revealed the paraffin scheme to European Union authorities on March 17, 2005. Under European Union regulations, Shell won complete forgiveness for what would have been a nearly $130 million fine, as calculated by the commission. Other companies — some far less implicated — faced fines eventually totaling nearly $900 million."

Auction design for bailout by treasury

Peter Cramton and Larry Ausubul weigh in, in "Auction Design Critical for Rescue Plan" in The Economists' Voice

"An auction that determines a
real price for a given security needs to require
multiple holders of the security to compete
with one another. This can be achieved if the
Treasury purchases only some, not all, of any
given security."

"Thus, a better approach would be for the
Treasury to instead conduct a separate auction
for each security and limit itself to buying
perhaps 50% of the aggregate face value. Again,
the auction starts at a high price and works its
way down. If the security clears at 30 cents on
the dollar, this means that the holders value
it at 30 cents on the dollar. (If the value were
only 15 cents, then most holders would supply
100% of their securities to be purchased at 30
cents, and the price would be pushed lower.)
The auction then works as intended. The price
is reasonably close to value. The “winners” are
the bidders who value the asset the least and
value liquidity the most.
This auction has an important additional
benefit. The “losers” are not left high and dry.
By determining the market clearing price, the
auction increases liquidity for the remaining
50% of face value, as well as for related securities.
The auction has effectively aggregated market
information about the security’s value. This
price information is the essential ingredient
needed to restore the secondary market for
mortgage backed securities."

Pollution permits: RGGI auction

The Regional Greenhouse Gas Inititative prepares to hold its first auction tomorrow: Emissions auction aims to be US model
Power plants in 10 states will bid on the right to pollute

"The first auction is really just a small release of allowances to the market for price discovery purposes," he said. "I think a lot of people will just be kind of testing the waters."

Here is the RGGI; auction results will be posted here. The auction will be a uniform price, sealed bid auction. A full set of documents is here.

Experiments played a role in the design process, see

Auction Design for Selling CO2 Emission Allowances Under the
Regional Greenhouse Gas Initiative
Final Report
October 26, 2007
Investigators:
Charles Holt, William Shobe
University of Virginia
Dallas Burtraw, Karen Palmer
Resources for the Future
Jacob Goeree
California Institute of Technology

Congestion in the market for parking spaces

The NY Times has a story called The Year of the Parking Space that touches on many parking related developments in NY. The most interesting part concerns congestion: lots of resources are spent trying to find parking spots.

"Meanwhile, the Department of Transportation is trying congestion rate parking in Greenwich Village as well as in and around Midwood to reduce double parking and cruising for available spots this fall. A recent Transportation Alternatives study on underpriced curbside parking on the Upper West Side found that drivers on Columbus Avenue cruise a total of 366,000 miles a year, producing 325 tons of carbon dioxide, at a cost to drivers of $130,000 per year in wasted fuel and more than 50,000 hours spent circling in traffic.
Further down the line? The department is trying to allow people to pay for parking via cellphones.
But for high-tech parking, San Francisco trumps us. They are developing a wireless sensor network that will announce which spaces are free at any moment. "

The Transportation Alternatives report linked in the excerpt is worth looking at. It begins in a way that makes clear why this is a market design problem:

"Every driving trip begins and ends with parking. But the demand for curbside parking in New York City far exceeds the supply. This mismatch is greatly compounded by the fact that curbside parking is free or priced far below garage rates, which are 10-15 times more expensive .
The low price of curbside parking unleashes a torrent of bargain-hunting drivers. Those who find spaces stay longer to make the most of their find. And when all spaces at the curb are occupied, other cars looking for parking circle in traffic for an elusive space. The saturation of curbside parking is a direct cause of air pollution, illegal parking and traffic congestion, all of which exact high costs on New York City’s environment, economy, health and quality of life."