Archive for the ‘Economics’ Category

Repugnant markets

December 22, 2009

Via Market Design, some abstracts from a researcher who specialises in the economics of ‘repugnant markets’:

Altruism and Intermediation in the Market for Babies:

Central to every legal system is the principle that certain items are off-limits to commercial exchange. In theory, babies are one such sacred object. This supposed ban on baby selling has been lamented by those who view commercial markets as the most efficient means of allocating resources, and defended by those who contend that commercial markets in parental rights commodify human beings, compromise individual dignity, or jeopardize fundamental values. However, the supposed and much-discussed baby selling ban does not, and is not intended to, eliminate commercial transactions in children. Instead, it is an asymmetric legal restriction that limits the ability of baby market suppliers to share in the full profits generated by their reproductive labor, insisting instead that they derive a large portion of their compensation from the utility associated with altruistic donation. Meanwhile, a wide range of baby market intermediaries profit handsomely in the baby market, without similar restrictions on their market activities. Baby selling “bans” thus have more in common with the rent-seeking by powerful marketplace actors seen in other commercial markets than with normative statements about the sanctity of human life. The author concludes with a call for the removal of the last vestiges of the “ban” against baby selling and other laws that diminish the capacity of baby market suppliers to access the marketplace.

Sunny Samaritans and Egomaniacs: Price-Fixing in the Gamete Market :

This Article considers the market structure of the human egg (or “oocyte”) donation business, particularly the presence of anti-competitive behavior by the fertility industry, including horizontal price-fixing of the type long considered per se illegal in other industries. The Article explores why this attempted collusion has failed to generate the same public and regulatory concern prompted by similar behavior in other industries, arguing that the persistent dialogue of gift-giving and altruistic donation obscures both the highly commercial nature of egg “donation” and the benefits to the fertility industry of controlling the price of a necessary input into many fertility services – namely, eggs. A comparison to the egg market’s closest cousin – the sperm market – does not reveal similar collusive attempts to depress the price of sperm. A further analysis of the industry explores potential reasons for this difference.

Brass balls and billions

December 22, 2009

Hedge fund manager to make billions from betting crazy:

An American hedge fund manager is set to collect a $US2.5 billion ($A2.8 billion) pay package for the year after staking huge bets that global banks would recover in 2009.

In one of the richest pay deals of recent years, David Tepper, boss of New Jersey-based Appaloosa Management, stands to land over a third of the $7bn profits generated by the firm in 2009. The hedge fund has said it generated over 120pc returns for year to the beginning of December.

Mr Tepper, a former Goldman Sachs trader who reportedly keeps a brass pair of testicles on his desk, started buying shares in American investment banks in February when the markets feared that the company’s would be nationalised. He bought Bank of America when the shares were trading below $3 and Citigroup at just $1. The firm, which specialises in spotting value in distressed companies, also bought large tranches of debt in February and March. He told the Wall Street Journal: “I felt like I was alone … no one was even bidding.”