Black market marijuana coexists with legal marijuana in Oregon, and competes with it in California

In a growing number of U.S. states, it is legal to grow and sell marijuana. But the price remains highest in the states where it is illegal, and so black markets persist alongside legal markets. 

Politico has the story:

‘Talk About Clusterf---’: Why Legal Weed Didn’t Kill Oregon’s Black Market. Legalization was supposed to take care of the black market. It hasn’t worked out that way.  By NATALIE FERTIG

"Over the last two years, there’s been such an influx of outlaw farmers that southern Oregon now rivals California’s notorious Emerald Triangle as a national center of illegal weed cultivation. Even though marijuana cultivation has been legal in Oregon since 2014, Jackson County Sheriff Nate Sickler says there could be up to 1,000 illegal operations in a region of more than 4,000 square miles. The Oregon Liquor and Cannabis Commission, which oversees the state’s $1.2 billion legal cannabis industry, estimates the number of illicit operations is double that.

...

"What is happening in the woods of the southern Oregon represents one of the most confounding paradoxes of the legalized marijuana movement: States with some of the largest legal markets are also dealing with rampant illegal production — and the problem is getting worse. Oklahoma, where licenses to cultivate medical marijuana are some of the easiest to get in the nation, has conducted more than five dozen raids on illicit grows since last April. In California, meanwhile, most of the state continues to purchase cannabis from unlicensed sources — straining legal operators already struggling with the state’s high taxes and fees.

...

"One of the underlying promises for legalizing cannabis was that legalization would make the illegal drug trade, with all its attendant problems of violent crime and money laundering, disappear. But 25 years into the legalization movement, as 36 states have adopted some form of legalized marijuana, the black market is booming across the country. Legal states such as Oregon and California — which have been supplying the nation for nigh on 60 years — are still furnishing the majority of America’s illegal weed.

...

"Oregon’s weed is some of the cheapest in the nation, and Oregonians predominantly purchase weed from licensed dispensaries. Economist Beau Whitney estimates that 80-85 percent of the state’s demand is met by the legal market. But most of the illicit weed grown in southern Oregon is leaving the state, heading to places where legal weed is still not available for purchase such as New York or Pennsylvania — or where the legal price is still very high, like Chicago and Los Angeles. In Illinois, which legalized medical marijuana in 2013, only about a third of the demand for cannabis is satisfied by legal dispensaries, according to Whitney. Differences in tax rate and regulations plays the major role in differences from state to state, Whitney explains.

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And in California it appears that high taxes on the legal market allow the black market to exist alongside. NBC has the story:

Craft cannabis industry in California is 'on the brink of collapse,' advocates say. Small cannabis growers and operators say the state's hefty taxes are shutting them out despite promises to expand the industry and make it more inclusive.  By Alicia Victoria Lozano

"Last month, marijuana companies warned Newsom in a letter that immediate tax cuts and a rapid expansion of retail outlets were needed to steady an increasingly unstable marketplace shaken by illicit dealers and growers.

"More than two dozen cannabis executives and legalization advocates signed the letter after years of complaints that the heavily taxed industry is unable to compete with the widespread illegal economy, which offers far lower consumer prices and has double or triple the sales of the legal market."

Vacancy chains in urban housing

 Vacancy chains occur not just in labor markets, but also in housing markets. (Earlier this week I wrote about housing chains for hermit crabs that result from evictions.)  A vacancy chain in a housing market can be thought of as a moving chain: someone moves into a vacant house or apartment (perhaps a newly constructed one), and someone else moves into the home they vacated, and so on, until the chain ends when a person who was in some different market (e.g. in rental housing, or in a distant location) moves into the last identifiable home in the chain.

Here are two papers that explore what happens when newly constructed housing is relatively expensive. They find that the chain often reaches much more moderately priced housing, i.e. adding to the stock of expensive housing also makes more affordable, existing housing available to new occupants.

The first paper draws on data from a dozen American cities (from Atlanta to San Francisco):

The effect of new market-rate housing construction on the low-income housing market, by Evan Mast, Journal of Urban Economics, Available online 27 July 2021, https://doi.org/10.1016/j.jue.2021.103383

Abstract: I illustrate how new market-rate construction loosens the market for lower-quality housing through a series of moves. First, I use address history data to identify 52,000 residents of new multifamily buildings in large cities, their previous address, the current residents of those addresses, and so on for six rounds. The sequence quickly reaches units in below-median income neighborhoods, which account for nearly 40 percent of the sixth round, and similar patterns appear for neighborhoods in the bottom quintile of income or percent white. Next, I use a simple simulation model to roughly quantify these migratory connections under a range of assumptions. Constructing a new market-rate building that houses 100 people ultimately leads 45 to 70 people to move out of below-median income neighborhoods, with most of the effect occurring within three years. These results suggest that the migration ripple effects of new housing will affect a wide spectrum of neighborhoods and loosen the low-income housing market.

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A more recent working paper draws on data from metropolitan Helsinki and reaches similar conclusions:

Bratu, Cristina and Harjunen, Oskari and Saarimaa, Tuukka, City-wide Effects of New Housing Supply: Evidence from Moving Chains (August 31, 2021). VATT Institute for Economic Research Working Papers 146, Available at SSRN: https://ssrn.com/abstract=3929243 or http://dx.doi.org/10.2139/ssrn.3929243

Abstract: We study the city-wide effects of new, centrally-located market-rate supply using geo-coded total population register data from the Helsinki Metropolitan Area. The supply of new market rate units triggers moving chains that quickly reach middle- and low-income neighborhoods and individuals. Thus, new market-rate construction loosens the housing market in middle- and low-income areas even in the short run. Market-rate supply is likely to improve affordability outside the sub-markets where new construction occurs and to benefit low-income people.

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Earlier:

Vacancy chains in housing for hermit crabs   

Blum, Y., A.E. Roth, and U.G. Rothblum "Vacancy Chains and Equilibration in Senior-Level Labor Markets," Journal of Economic Theory, 76, 2, October 1997, 362-411.

Dialysis provider DaVita enters the transplant space

 Here's the press release:

DaVita Acquires MedSleuth, Deepens Efforts to Improve Transplant Experience. Transplant software company helps DaVita bolster its presence along the kidney care journey

" DaVita Inc. today announced its acquisition of transplant software company MedSleuth. Working with transplant centers across the U.S., MedSleuth aims to create greater connectivity among transplant candidates, transplant centers, physicians and care teams to help improve the experience and outcomes for kidney and liver transplant patients.

"With this acquisition, DaVita deepens its efforts to fuel transplant innovation, underscoring its commitment to improve care at every stage and setting along a patient's kidney care journey.

"Kidney transplantation is a life-changing option for most people with kidney failure, one that's limited today by supply and complexity," said Javier Rodriguez, CEO for DaVita. "MedSleuth has built a powerful platform that can help increase patients' access to transplantation. We're looking forward to supporting the team to accelerate innovation and help streamline the transplant process for transplant candidates, transplant centers, physicians and care teams."

"From lack of supply to meet the demand to understanding and staying on top of the complex process from workup to wait list to transplant, the U.S. transplant system can be complicated to navigate.

"MedSleuth's innovative software can help not only streamline the process of evaluating candidates and keep them active on the waitlist but may also help increase the rate of transplantation through living donation. The software can also make it easier for transplant candidates' doctors and care teams to help support them along the transplant journey.

"BREEZE™, MedSleuth's flagship product, helps remove certain barriers for potential kidney and liver donors and recipients by remotely gathering relevant clinical and demographic information and sharing it with participating transplant centers—effectively streamlining the transplant process, from candidate evaluation through donor and recipient follow-up.

"MATCHGRID™, MedSleuth's paired exchange platform, uses optimization algorithms to find chains for paired donation. This helps transplant center clinicians rapidly match living organ donors with recipients who have willing, healthy but incompatible donors."

HT; Martha Gershun

Evictions and coalitions in the housing market of hermit crabs--shell trafficking in the wild

 I've previously blogged about the observation that hermit crabs, who live in the shells of other animals and have to get new shells as they grow, sometimes engage in chains of exchange, that resemble kidney exchange chains, or vacancy chains in labor markets.

In particular, they resemble kidney exchange chains initiated by a deceased donor, in this case initiated by an empty shell.

 Here's a new article about hermit crabs which reports that they also engage in something that looks like organ trafficking, with a hermit crab being forcibly removed from its shell by two smaller crabs acting in concert, so that one of them may occupy the now vacant shell while the other moves into the shell of its partner in crime.

Laidre, Mark E. "The Architecture of Cooperation Among Non-kin: Coalitions to Move Up in Nature’s Housing Market." Frontiers in Ecology and Evolution (2021): 928.

"Coalitions typically involve two individuals (a pair), with a third individual being the target that the two-member coalition seeks to evict from its shell (Figure 1). Both members of the coalition have shells of their own, but these individuals and their shells are virtually always smaller than that of the target individual and its shell. Sometimes, based on the commotion and struggle generated during an attempted eviction, additional individuals—beyond the target and the core two-member coalition—are attracted to the area. These additional individuals—referred to as “third parties” or “bystanders”—are not part of the actual coalition, since they do not help at all to evict the target. Generally, third parties simply wait in the vicinity and sometimes position themselves in a social chain, which emanates from the back of the shell of one or both of the coalition members (Figure 2). This positioning in a social chain enables third parties to indirectly benefit, since in the event an eviction succeeds, it can catalyze a succession of back-to-back shell swaps (see Laidre, 2019a). Third parties are thus, in effect, “free riders” (Sigmund, 2010), since their positioning around the coalition offers no advantage whatsoever to the coalition itself as it works to evict the target. Indeed, whether third parties are positioned in a chain or not, they merely wait, performing no pulling actions and never adding any strength or providing any help to the two-member coalition. Interestingly, based on precisely where third parties position themselves, some may potentially even undermine the coalition (see below), effectively acting not merely as “free riders” but as “cheaters” (Sigmund, 2010). Finally, if too many bystanders accumulate, it can lead to chaotic jockeying and repositioning, with the original coalition separating.

"Whether with third parties present or not, the two members of the coalition attempt to physically evict the target. The target remains flipped on its back (i.e., with the dorsal side of its shell on the ground) and the opening of the target’s shell faces upward, allowing both coalition members to use their claws and legs to grab at and pull the anterior portion of the target’s body. As the coalition forcibly pulls, the target attempts to resist by clinging inside its shell. Typically, the two coalition members both pull simultaneously; though at times the two may alternate attempts at pulling, each doing so sequentially as one or the other member briefly rests. Both members of a coalition appear strongly involved, in terms of time and effort. Yet coalitions are not always successful. In some cases, one or both coalition members may give up; or the target individual may manage to flip itself over, escape from being pinned down, and run away. If a coalition is successful at evicting the target, the time till eviction occurs can vary widely, from just minutes up to hours (Laidre, personal observation). Once a coalition is successful and the target individual is evicted from its shell, then the evictee is pushed to the side and remains naked and shell-less as one of the coalition members moves into its now empty shell."

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Earlier:

Saturday, July 21, 2012

Hermit Crab Vacancy Chains

Thursday, January 16, 2020

Vacancy chains and hermit crab housing, revisited

Honoring Milgrom and Wilson at the ASSA meetings in January (video)

 The video is at the link, there are four ten minute discussions, followed by brief responses by Paul and Bob. 

My discussion of Bob Wilson begins at around 27:20, and my final words to him were "Bob: you saw and demonstrated the future of game theory in economics, earlier and more clearly than anyone else.  We’re all lucky to know you."

AEA Nobel Laureate Address Honoring the 2020 Nobel Laureates Paul R. Milgrom (Stanford University) and Robert B. Wilson (Stanford University)
January 8, 2022 at 2:30 PM ET
View Recording

Presiding: Christina D. Romer, University of California-Berkeley

Susan Athey

, 

Stanford University

Topic: Honoring Paul R. Milgrom

Bengt Holmstrom

, 

Massachusetts Institute of Technology

Topic: Honoring Paul R. Milgrom

Alvin Roth

, 

Stanford University

Topic: Honoring Robert B. Wilson

Srihari Govindan

, 

University of Rochester

Topic: Honoring Robert B. Wilson

Centralized Student Choice and Assignment Systems around the world

 Christopher Neilson at Princeton has launched a web site aimed at organizing information on school choice around the world. The site opens with an ambitious world map, and it looks like there is still plenty of room for contributions from people with information on school choice systems wherever they are.

Centralized Student Choice and Assignment Systems

"Centralized Choice and Assignment Systems have been implemented in many countries and different settings, in an adoption trend that is likely to continue.

"With support from the Industrial Relations Sector at the Economics Faculty of Princeton University, this project aims to document the adoption trend and the large heterogeneity in implementation practices, with the objective of fostering further research into the different systems and identifying best practices for different contexts.

"The team has worked intensively in collecting and organizing the data. Nonetheless, the project is very ambitious and information about the different systems can be improved and needs to be updated. Therefore, with this challenge in mind, this webpage has been created to be able to share the data with the research and policy making communities around the world, and to invite everyone to contribute to the effort, suggesting edits and additional information that will improve upon the data collected."

Neighborhoods matter in school choice

 Here's a working paper that observes that assignments of places to pre-kindergarten students remains strongly influenced by where the children live, even in the presence of a school choice system.  I.e. many pre-kindergarten students go to neighborhood schools.

Distance to Schools and Equal Access in School Choice Systems, by Mariana Laverde

 Abstract: This paper studies the limits of school choice policies in the presence of residential segregation. Using data from the Boston Public Schools choice system, I show that white prekindergarteners are assigned to higher-achieving schools than minority students, and that cross-race school achievement gaps under choice are no lower than would be generated by a neighborhood assignment rule. To understand why choicebased assignments do not reduce gaps in school achievement, I use data on applicants’ rank-order choices to estimate preferences over schools, and consider a series of counterfactual assignments. I find that half of the gap in school achievement between white and Black or Hispanic students is explained by minorities’ longer travel distance to high-performing schools. Differences in demand parameters explain a smaller fraction of the gap, while algorithm rules have no effect."

From the conclusions:

"The salience of travel costs shows a first-order channel for why neighborhoods matter, highlighting how the effective provision of public goods can be affected by geography at very granular levels. In some way these results are not surprising. Most, if not all, of the papers that study school demand agree that distance is a key factor in parental choices. This paper takes this observation one step further and quantifies how much this cost limits the effectiveness of school choice policies in equalizing access to high-achieving schools. The results show that even in a generous choice environment where parents face minimal restrictions to their choices and free transportation is provided, distance can contribute greatly to inequity and that the design of the assignment algorithm can do little to break structural place-based inequities. This finding is not only relevant for the pre-kindergarten population. Not only we know that early investments can have lasting impacts on adult outcomes, but also, choice systems are typically designed to grandfather students into subsequent grades within a school. Then, even if travel costs are lower for older children, early assignments are held for several years after. In consequence, inequities in pre-kindergarten extend well after that period."

Experimental Economics in the Tradition of John Kagel (video)

 In October there was an in-person celebration of John Kagel, which I was delighted to participate in, in Tucson, Arizona. (It was my first in-person conference since the beginning of the Covid pandemic, during a brief window of optimism.) Now it's been posted on YouTube by the hosts, at the Economic Science Lab of the University of Arizona:

Keynote lecture of Professor Alvin Roth at the Workshop in Honor of John Kagel, Tucson, Arizona, October 2021

My talk was called Experimental Economics in the Tradition of John Kagel, and I began by explaining this photograph, which has John in the middle.

I eventually focused on how the following experiment helped shape a good deal of practical market design:

Kagel, John H. and A.E. Roth, "The dynamics of reorganization in matching markets: A laboratory experiment motivated by a natural experiment," Quarterly Journal of Economics, February, 2000, 201-235.

And I concluded by giving John some unnecessary advice as he embarks on his tenth decade.

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You can see more from the 2021 North-American Economic Science Association Conference (including the above video) here.

Black market supply chains, Persian gulf stories

 Supply chains around the world are reacting to disruptions caused by Covid and other things. And those are mostly uncontroversial, uncontested legal supply chains.  For black markets things are even tougher. Here are two stories, about oil and arms, from the Persian gulf. Both are from the WSJ:

Smuggled Iranian fuel and secret nighttime transfers: Seafarers recount how it’s done  By Katie McQue

"The secret transfers usually take place at night to evade detection by regional coast guards. The ships anchor in the Persian Gulf just outside the territorial limits of the United Arab Emirates, and then, individually, small boats carrying smuggled Iranian diesel shift their loads to the waiting vessels, according to seafarers who have witnessed the trade.

“It is a big chain, with fishing boats sailing up to give diesel to a waiting tanker. It takes four to five days because boats come one by one,” said a 27-year-old Indian seafarer, who spoke on the condition of anonymity for fear of reprisals. He said he had been employed by a Dubai-based shipping company that smuggled Iranian fuel to Somalia.

...

"In addition to the nighttime transfers at sea, Iranian diesel bound for international markets is exported on tankers setting sail from Iran with the origin of the shipment forged to make it look as though it came from Iraq or the UAE, according to a third seafarer and three experts in security and energy affairs.

"Because of the profit margins, this trade was highly lucrative even before the United States pulled out of the nuclear deal. Iran has some of the world’s cheapest fuel prices thanks to very low production costs, heavy government subsidies and a weak currency. But the reimposed economic sanctions have given this business a further boost as smugglers seek to evade restrictions on Iranian oil exports. 

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Iran Navy Port Emerges as Key to Alleged Weapons Smuggling to Yemen, U.N. Report Says  By Benoit Faucon  and Dion Nissenbaum

"Thousands of rocket launchers, machine guns, sniper rifles and other weapons seized in the Arabian Sea by the U.S. Navy in recent months likely originated from a single port in Iran, according to a confidential United Nations report that provides some of the most detailed evidence that Tehran is exporting arms to Yemen and elsewhere.

"The draft report prepared by a U.N. Security Council panel of experts on Yemen said small wooden boats and overland transport were used in attempts to smuggle weapons made in Russia, China and Iran along routes to Yemen that the U.S. has tried for years to shut down. The boats left from the Iranian port of Jask on the Sea of Oman, the U.N. report said, citing interviews with the boat’s Yemeni crews and data from navigational instruments found on board."

New York State bills propose to be more generous to living donors

 Frank McCormick points out an op-ed in the Albany Times Union newspaper, coathored by a medical ethicist and a kidney donor:

Commentary: Kidney donors are heroes. We need to treat them that way.  by Arthur Caplan and Sammy Beyda

"if just a small fraction of Americans donated their kidneys, the 100,000- person organ waitlist might be eliminated. It stands to reason, then, that we should enact some sort of legislation to incentivize kidney donation, but many have argued against paying Americans to sell their kidneys, and federal law prohibits such sales.

"However, there is another way to proceed that preserves core transplant donation values while seeking to increase living kidney donation. A new bill in the state Legislature would fully compensate New Yorkers for the costs associated with living donation, and another would offer free health insurance to anyone who donates.

...

"What the New York legislation understands is that kidney donation is an act of commendable public service, one that deserves all the honors that we give to public servants like soldiers, nurses, EMTs, and firefighters. Instead of trying to pay donors in a market system that would treat donation as a transaction, we should properly treat donors as what they are: heroes trying to help those in dire need.

...

"There’s a real opportunity for New York to lead the nation in stamping out death and disability due to kidney disease by taking bold steps to increase living kidney donation. As a bioethicist and a kidney donor, we recognize that now is the time to act. State lawmakers should prioritize these bills and provide a safety net for those willing to be donors. You should not lose money or risk debt to be a hero."

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Here's a paper about treating donors as heroes:

Niederle, Muriel and Alvin E. Roth, “Philanthropically Funded Heroism Awards for Kidney Donors?, Law & Contemporary Problems, 77:3, 2014, 131-144.  )

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And as I've noted before, kidney disease is persistently among the top ten causes of death in the US and around the world, with over 50,000 deaths in 2020 in the U.S.

Saturday, April 17, 2021

The Leading Causes of Death in the US for 2020

First pig-to-human heart transplant (and some background on the trials with non human primates)

 Xenotransplants, of pig organs into humans, may be closer than I thought. A dramatic step was taken last Friday when a pig heart was successfully transplanted into a man who was still being kept alive by the heart yesterday when the NY Times reported it.  Following the news story, I'll link to a recent summary of the increasing success of transplanting pig hearts into non-human primates.  In the near term, the idea is that a pig heart might keep a patient alive until a human organ becomes available.

Here's the NY Times story:

In a First, Man Receives a Heart From a Genetically Altered Pig. The breakthrough may lead one day to new supplies of animal organs for transplant into human patients.  By Roni Caryn Rabin

"A 57-year-old man with life-threatening heart disease has received a heart from a genetically modified pig, a groundbreaking procedure that offers hope to hundreds of thousands of patients with failing organs.

"It is the first successful transplant of a pig’s heart into a human being. The eight-hour operation took place in Baltimore on Friday, and the patient, David Bennett Sr. of Maryland, was doing well on Monday, according to surgeons at the University of Maryland Medical Center.

“It creates the pulse, it creates the pressure, it is his heart,” said Dr. Bartley Griffith, the director of the cardiac transplant program at the medical center, who performed the operation.

“It’s working and it looks normal. We are thrilled, but we don’t know what tomorrow will bring us. This has never been done before.”

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And here's a just-published paper that gives some background:

Shu, S., Ren, J. & Song, J. Cardiac xenotransplantation: a promising way to treat advanced heart failure. Heart Fail Rev 27, 71–91 (2022). https://doi.org/10.1007/s10741-020-09989-x

Abstract: Cardiac xenotransplantation (CXTx) might be a promising approach to bridge the gap between the supply and demand of a donor heart. The survival of cardiac xenograft has been significantly extended in pig-to-nonhuman primate (NHP) CXTx, with records of 195 days and 945 days for orthotropic and heterotopic CXTx, respectively. ...

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Earlier:

Sunday, December 5, 2021

Organ shortages for transplantation: Pig kidneys won't be transplanted into people soon

The price of nails since 1695

 If your friends and relatives wonder why economists write about the things we do, this interesting paper should reassure them that someone is minding the economics store and thinking deeply about prices...

THE PRICE OF NAILS SINCE 1695: A WINDOW INTO ECONOMIC CHANGE by Daniel E. Sichel

NBER Working Paper 29617, http://www.nber.org/papers/w29617

Abstract: This paper focuses on the price of nails since 1695 and the proximate source of changes in those prices. Why nails? They are a basic manufactured product whose form and quality have changed relatively little over the last three centuries, yet the process for producing them has changed dramatically. Accordingly, nails provide a useful prism through which to examine a wide range of economic and technological developments that touch on multiple areas of both micro- and macroeconomics. Several conclusions emerge. First, from the late 1700s to the mid 20th century real nail prices fell by a factor of about 10 relative to overall consumer prices. These declines had important effects on downstream industries, most notably construction. Second, while declining materials prices contribute to reductions in nail prices, the largest proximate source of the decline during this period was multifactor productivity growth in nail manufacturing, highlighting the role of the specialization of labor and re-organization of production processes. Third, the share of nails in GDP dropped back from 0.4 percent of GDP in 1810—comparable to today’s share of household purchases of personal computers—to a de minimis share more recently; accordingly, nails played a bigger role in American life in that earlier period. Finally, real nail prices have increased since the mid 20th century, reflecting in part an upturn in materials prices and a shift toward specialty nails in the wake of import competition, though the introduction of nail guns partly offset these increases for the price of installed nails.

"nails are ideal for this analysis because there has been relatively little change in the product itself (unlike the production of computing power or lighting), thereby greatly simplifying the task of adjusting for changes in quality over time.

...

" In 1810 (the earliest year for which I could assemble necessary data), the use of nails in the US (measured as production plus imports minus exports) was about 0.4 percent of nominal GDP as shown in Figure 1. To put this share into perspective, in 2019 household purchases of personal computers and peripheral equipment amounted to roughly 0.3 percent of GDP and household purchases of air travel amounted to about 0.5 percent. That is, back in the 1700s and early 1800s, nails were about as important in the economy as computers or air travel purchased by consumers are today. "

Stanford Institute for Theoretical Economics (SITE) Conference from July 1 to September 16, 2022.

 Here's the call for papers for the series of summer conferences to be held at Stanford this summer, hopefully in person.

SITE 2022 Conference: Call for Papers

There are 17 mini-conferences this year: details at the link.

Legally fragmented markets for marijuana create unusual alliances

 Who will be most in favor of eliminating the federal ban on marijuana in the US?  Not necessarily growers and sellers in the many states in which marijuana can legally be grown and sold.  There are some advantages to being in a legal market that is illegal elsewhere (and not just because of the possibility of illegally selling at the higher prices that black markets command...)

The WSJ has this story:

Cannabis Overhaul in Washington Is Only Getting Harder. Legalization agenda could be complicated by states that want to defend their nascent marijuana industries and associated tax revenues  By Carol Ryan

"To date, 18 states have legal adult-use cannabis industries, according to the latest tally from the Marijuana Policy Project. As the drug can’t be transported across state borders while it is still federally outlawed, anything that is smoked within a state has to be grown and sold locally. These independent fiefs, which are growing bigger every month, would be disrupted by national legalization.

"One of the biggest concerns is what happens when cannabis can be traded across the country. More mature marijuana markets such as California and Oregon see interstate commerce as an opportunity to get excess stock off their hands. For recent converts such as New York and New Jersey, a gush of cheap outside inventory would be a threat to their nascent industries. This is particularly sensitive for small, minority-owned cannabis businesses that are being given priority for licenses but would be rapidly undercut.

"States also want to protect the tax windfall that cannabis creates. Illinois has collected more taxes from cannabis than liquor every month since February, according to the Illinois Department of Revenue. Since 2014, when legal sales began in Colorado and Washington, cannabis has raised $7.9 billion in taxes for states, according to the Marijuana Policy Project. Sales levies should stay with local markets, but those associated with production could be hard for certain states to hold on to if the drug is federally legal. Cultivation is likely to shift to warm and low-cost states where cannabis can be grown cheaply outdoors."

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And then there's Oklahoma. The NY Times has the story:

How Oklahoma Became a Marijuana Boom State. Weed entrepreneurs have poured into Oklahoma from across the United States, propelled by low start-up costs and relaxed rules.  By Simon Romero

"Ever since the state legalized medical marijuana three years ago, Oklahoma has become one of the easiest places in the United States to launch a weed business. The state now boasts more retail cannabis stores than Colorado, Oregon and Washington combined. In October, it eclipsed California as the state with the largest number of licensed cannabis farms, which now number more than 9,000, despite a population only a tenth of California’s.

"The growth is all the more remarkable given that the state has not legalized recreational use of marijuana. But with fairly lax rules on who can obtain a medical card, about 10 percent of Oklahoma’s nearly four million residents have one, by far the most of any other state.

...

"That unfettered growth has pitted legacy ranchers and farmers against this new breed of growers. Groups representing ranchers, farmers, sheriffs and crop dusters recently joined forces to call for a moratorium on new licenses. They cited climbing prices for land, illicit farms and strains on rural water and electricity supplies as among the reasons. In some parts, new indoor farms are using hundreds of thousands of gallons of water.

...

"But unlike local businesses, where the customers are typically residents, critics assert that growers in Oklahoma are producing far more marijuana than can possibly be sold in the state and are feeding illicit markets around the country.

"Because of lower costs for licensing, labor and land, growers can produce cannabis for as little as $100 a pound, and then turn around and sell that for between $3,500 to $4,000 a pound in California or New York, said Mark Woodward, a spokesman for the Oklahoma Bureau of Narcotics.

Black markets in border crossing

 Human smuggling across borders has become a substantial business, with the demand by desperate migrants being filled by criminal gangs, some of them more used to smuggling drugs. Here's a story from the WSJ about migrants aiming to come to the U.S. through Mexico, and then a somewhat similar story about crossing the Mediterranean to reach Europe.

Truck in Fatal Mexican Crash Was Packed With Over 160 Migrants. Smugglers said to cram people into tractor-trailers to avoid increased inspections of passenger buses on way to U.S.  By José de Córdoba  and Anthony Harrup

"It was the worst accident involving migrants in Mexico and the highest single-day toll since the killing of 72 migrants by the Zetas drug cartel in the border state of Tamaulipas in 2010. A group of Guatemalan migrants were massacred earlier this year by Mexican security forces, also in Tamaulipas.

"More than have 650 people died this year attempting to cross the U.S.-Mexico border, more than in any year since 2014, the United Nations International Organization for Migration said Friday.

"Most of the migrants were from Guatemala, although there were several from the Dominican Republic, Honduras and Ecuador, Gen. Rodríguez Bucio said.

"He said the migrants entered Mexico through mountain paths and dirt roads in smaller groups several days earlier. They had gathered at safe houses used by smugglers in the city of San Cristóbal de las Casas, from where they were loaded onto the truck Thursday afternoon.

...

"Guatemalans have few legal pathways to emigrate to the U.S., said Andrew Selee, the president of the Migration Policy Institute, a Washington-based think tank. In fiscal year 2020, the U.S. provided about 4,000 seasonal work visas to Guatemalans.

“We urgently need to find ways of creating legal pathways for people to migrate instead of driving them further into the hands of smugglers and raising the risk of the journey,” Mr. Selee added."

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And this from Associated Press via the Guardian:

At least 16 dead after third migrant boat in three days sinks in Greek waters.  People still missing despite major rescue effort as smugglers switch to more perilous route from Turkey

"At least 16 people have died after a migrant boat capsized in the Aegean Sea late Friday, bringing to at least 30 the combined death toll from three accidents in as many days involving migrant boats in Greek waters.

"The sinkings came as smugglers increasingly favour a perilous route from Turkey to Italy, which avoids Greece’s heavily patrolled eastern Aegean islands that for years were at the forefront of the country’s migration crisis.

...

"“People need safe alternatives to these perilous crossings,” the Greek office of the United Nations Refugee Agency, UNHCR, said in a tweet.

...

"Greece is a popular entry point into the European Union for people fleeing conflict and poverty in Asia, the Middle East and Africa. But arrivals dropped sharply in the last two years after Greece extended a wall at the Turkish border and began intercepting inbound boats carrying migrants and refugees – a tactic criticised by human rights groups.

"More than 116,000 asylum-seekers crossed the Mediterranean to reach EU countries this year as of 19 December, according to UNHCR. The agency said 55% travelled to Italy, 35% to Spain and 7% to Greece, with the remainder heading to Malta and Cyprus."

The design and performation of markets: a discussion, by Michel Callon and Alvin Roth in the AMS Review

 The AMS Review, a journal of the American Marketing Society, has put together an issue on the theory of markets.  When I was approached by Professor Hans Kjellberg to contribute a paper, I replied that I would rather engage in a dialog with one of the other proposed contributors, the great French economic sociologist Michel Callon.  Professor Kjellberg conveyed that proposal to Professor Callon, and so it was that we corresponded by email, over a pandemic year and a half.  Professor Kjellberg edited the emails to make an article of them, and also wrote an introduction. Here they are (still behind a paywall).

Kjellberg, H. Market expertise at work: introducing Alvin E. Roth and Michel Callon. AMS Rev (2021). https://doi.org/10.1007/s13162-021-00217-9

Callon, M., Roth, A.E. The design and performation of markets: a discussion. AMS Rev (2021). https://doi.org/10.1007/s13162-021-00216-w

"This discussion between Alvin Roth and Michel Callon is the result of a series of e-mail exchanges over the course of 18 months. It was triggered by an invitation extended to both authors to contribute to this special section of AMS Review on theories of markets. The discussion starts off with direct responses to the question put by Hans Kjellberg in his preceding commentary, which introduces the work of Roth and Callon, respectively. Then follows a discussion that touches upon, develops, and clarifies a number of issues related to the two authors’ respective positions on and approaches to markets and their organizing."

********

Professor Kjellberg asked each of us to begin the exchange by answering the question "Why and how did you come to work on market design and the performativity of economics, respectively? "

Here are some paragraphs excerpted from the first and last paragraphs of my answer:

"I received my Ph.D. in Operations Research (OR) in 1974. (That "7" makes it sound as if it were a long time ago…) I studied game theory, and in those days, before game theory blossomed in economics, it seemed that it would find a natural home in OR. I’ve sometimes been asked how I switched from OR to ECON, and my answer is that I just stayed where I was as the disciplinary boundaries shifted around me. 

"Even though market design (or marketplace design) wasn’t yet recognized as a part of economics, game theory was its natural starting place.

...

"I was privileged to be involved in the first kidney exchange between the United Arab Emirates and Israel in the summer of 2021 (della Cava, 2021; Roth, 2021). That exchange shows that kidney exchange, and markets more generally, can do more than save lives and promote health and welfare, and are not just the fruits of peace: they can also help make and solidify peace. (Perhaps Michel would say that peace is one of the social arrangements that promote markets, and well-designed markets are among the social arrangements that promote peace.)

"The Covid pandemic shed light on the fact that even when in normal times there is social support for using money as a primary way to allocate many scarce goods, in an emergency this social support can be strained. When masks, ventilators, and vaccines were in short supply, there was no widespread attempt to allocate them within countries primarily to those who could pay the most. That is, in emergencies it can be both operationally difficult and socially repugnant to rely on prices to allocate scarce goods, and so markets sometimes need to shift from their normal design to an emergency mode (Cramton et al., 2020). Thus after natural disasters, we often see rationing, price controls, subsidies and other temporary interventions.

"This should help us keep in mind that marketplaces are human artifacts: they are tools. When well designed to meet the needs of the larger environment in which they operate, they may work well, and when they are not, they may need to be redesigned. So, market design, and “design economics” more generally, can be thought of as the engineering part of game theory. Michel’s work on “performativity” in economics can help expand on this distinction between science and engineering.

"In short, market design, which is an ancient human activity, is naturally studied by economists, engineers, sociologists, and marketers, and is intimately involved with the human experience. I hope you can see why I couldn’t resist being drawn in."

***********

On related matters:

Professor Callon has a book newly translated into English:

Markets in the Making: Rethinking Competition, Goods, and Innovation, by Michel Callon, Translated by Olivia Custer, Edited by Martha Poon, Princeton University Press, Published (US): Dec 7, 2021.

Here's my blurb for the book:

"“In Markets in the Making, Michel Callon explains the unique view of markets he has distilled from his long career observing markets, in detail, from the perspective of an engineer-sociologist. In a book that will fascinate economists as well as sociologists, he introduces us to a new vocabulary to help us think about markets whose participants may be collectives, and whose infrastructure helps participants determine what they want, and calculate what they need.”—Alvin Roth, Nobel Memorial prize winner for economics and Craig and Susan McCaw Professor of Economics, Stanford University"

***********

And here are some of my other posts on sociology and economics from the point of view of performativity.  Here's one of those that may have first planted the seed for my desire to correspond with Michel Callon, it's a link to a blog post of Jose Ossandon:

Thursday, April 11, 2013

The economics of designing markets, and the sociology of "civilizing" them

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(this post "The design and performation of markets: a discussion, by Michel Callon and Alvin Roth in the AMS Review" appeared for a few hours as if published on 6 December rather than 6 January, due to a keyboarding error...:(

The Professional Psychology Match and post-match scramble

 Here's an article that (among other things) describes the APPIC Match, and the more recently organized (and regularized) post-Match scramble for unfilled positions.

JenniferA.Erickson Cornish and Jeff Baker

"A Brief History of the Association of Psychology Postdoctoral and Internship Centers:  Trends and Directions for the Education and Training of Health Service Psychologists," Training and Education in Professional Psychology  

(2021,December20)  http://dx.doi.org/10.1037/tep0000401

Abstract: The Association of Psychology Postdoctoral and Internship Centers (APPIC) is the largest health service psychology education and training council in the U.S. and Canada, with approximately 787 internships, 238 postdoctoral programs, and 431 doctoral program associates. APPIC regularly interacts with the other major training councils over the entire developmental graduate sequence from doctoral education through postdoctoral fellowships. All psychology doctoral students in accredited clinical, counseling, and school programs are required to complete an internship in health service psychology, with a significant majority of those students (3,684 in 2021) obtaining those internships via the APPIC match. Although there is no current similar APPIC match for postdoctoral training, APPIC provides selection guidelines for such training and hosts a list of over 1,600 positions available each year. 

"A computerized national match began with the 1998–1999selection process (10 years after a less than successful trial led tothe board deciding to discontinue it) in which 2,923 students applied for 2,631 positions, and 83% were matched (Keilin, 2000). This match, overseen by NMS, used an algorithm based on the NationalResidency Match Program (Roth & Peranson, 1999) and was deemed a success in a subsequent survey, although applicants and directors of clinical training were more satisfied than internship training directors (Keilin, 2000). In 2010, due to the leadership of then chair Sharon Berry, Phase II of the match was launched. Phase II brought about significant changes since it allowed applicants additional time to review and apply to another program if unsuccessful in Phase I, gave internship programs additional time to review Phase II applicants in a more thorough manner, and removed much of the fairly chaotic process that was frantic for both applicants and training directors (some of whom had to replace their fax machines due to overload). The former clearinghouse became the PMVS in 2011. The PMVS currently does not include a match but rather lists postings of positions that are still available on the APPIC website, allowing candidates and sites to participate in an informal selection process as needed. The PMVS will become part of the AAPI process in 2022 and will bring some additional order for those programs that still have openings and for trainees who haveeither not matched or were recently able to participate in the match. In2012, the Nobel Prize for Economics was given for the Roth–Peranson Algorithm used in the match by NMS. The match became limited to students from doctoral programs accredited by the APA or Canadian Psychological Association (including those with a site visit scheduled) and in 2021 to APPIC member internship programs. Previously, nonmember programs could participate in the match with the development of“ Provisional” membership; all programs would now have undergone review by the APPIC membership committee prior to participating in the match.

**********

Some historical background:

Roth, A.E. and X. Xing, "Turnaround Time and Bottlenecks in Market Clearing: Decentralized Matching in the Market for Clinical Psychologists," Journal of Political Economy, 105, April 1997, 284-329.

Paul Milgrom and Robert Wilson. From theory to practice in auctions (in French)

 Here's a tribute to Milgrom and Wilson in French (but Google translate does a pretty good job):

Paul Milgrom et Robert Wilson. De la théorie à la pratique des enchères, par Florence Naegelen, Dans Revue d'économie politique 2021/6 (Vol. 131), pages 825 à 847

G translate: Paul Milgrom and Robert Wilson. From theory to practice in auctions

Here's one snippet:

"R. Wilson ([1967], [1969] and [1977]) provided the first analysis of Bayesian equilibrium strategies in the case of a common and uncertain value. This work was extended by P. Milgrom [1981a] and by many other authors subsequently. [6] Introducing the hypothesis of conditional independence according to which the signals received are positively correlated, Wilson [1969] thus showed that, in this context, the winner was the one who overestimated the true value of the object the most. He also highlighted how agents should determine their offers by incorporating into their strategies that the winner is the one with the highest signal."

Rising Stars in Market Design, featuring Alex Chan, Aram Grigoryan and Dong Woo Hahm, at the Tokyo Market Design center

 The University of Tokyo Market Design center hosts Rising Stars in Market Design

Alex Chan, Aram Grigoryan, Dong Woo Hahm

Decriminalizing personal drug use

 The WSJ has the story

Some Cities Turn to Decriminalizing Drugs as Overdoses Climb. Toronto follows Vancouver and the state of Oregon in seeking to make it legal to carry small amounts of heroin, fentanyl and other drugs for personal use.  By Vipal Monga

"Canada’s largest city is the latest jurisdiction aiming to decriminalize drug possession as it faces a surging overdose epidemic.

"Toronto’s board of health this month said it would seek permission from Canada’s federal government to allow drug users to carry small amounts of drugs for personal use, including heroin, fentanyl and cocaine, without fear of prosecution. The exemption wouldn’t cover drug trafficking, which would remain a criminal offense.

"City officials hope that decriminalization will make it easier for people to get help. They say it could also make it easier for drug users to get jobs and stable housing because they won’t have criminal records.

...

"The new policies and proposals come as officials say they are seeking ways of handling an overdose epidemic that has swept across North America. Drug users are dying in record numbers as an increasingly toxic drug supply overwhelms the black market.

“The current approaches to drug policy and regulation are not working,” said Dr. Eileen de Villa, medical officer for Toronto, during a presentation to the city’s board of health on Dec. 6."