Andrew over at the Stackelberg Follower discusses the economics of the seal hunt and briefly touches on the world’s response:

[I]t is clear that a large part of the world either derives disutility from the seal hunt, derives utility from decrying the seal hunt, or some convex combination thereof. If it the former, there is a possibility for a Coasian bargain, i.e. the rest of the world pays off Atlantic Canada to stop the hunt/transport the seals somewhere else. If the latter dominates, then it is optimal for the hunt to continue.

A Coasian bargain is an application of the Coase Theorem, which in this case basically says that if the seal hunt imposes externalities on the rest of the world, then the rest of the world can pay Atlantic Canada some amount a) greater than or equal to the economic benefit derived from the seal hunt, and b) less than or equal to the economic cost generated by the seal hunt.

The Coase Theorem is applied commonly in tort law, where the cost of the tort is allocated to the party most able to bear it, and the parties are expected to negotiate out a more efficient allocation themselves (with failed negotiations penalizing the more-able party). The idea is that if the court’s allocation is inefficient, the parties are in the best position to make it optimal.

That said, neither of us is aware of any situation in which a Coase bargain has been attempted in a similar situation.

Sorry about the infrequent updates. It’s a busy time in the semester.

Barry Bonds is, without a doubt, one of the most controversial figures in baseball. He’s currently trying, again, what he tried last year - shopping himself around for the league’s minimum salary. (Thanks to the Sports Law Blog for the link.) Inside, I’d like to briefly discuss collusion and look at the incentives involved with this situation.

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Skip Sauer at The Sports Economist had an interesting post about Houston Rockets forward Shane Battier’s lack of traditional stats and Rockets GM Daryl Morey’s belief in him regardless. Morey’s use of an adjusted plus-minus stat to justify hiring Battier is reminiscent of Billy Beane’s attention to on-base percentage in building the Oakland As as detailed in Moneyball.

What I take from Sauer’s post is that plus-minus is a surrogate variable for ability to be a team player. That opens the broader question of what can be measured and whether nonmeasurable statistics are ever useful in building a team.

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At Sabernomics, JC Bradbury crunches some numbers on home run numbers for Alex Rodriguez during the seasons in which he admits steroid use:

So, what were A-Rod’s steroids worth? 2.37 home runs over two seasons, or a little over one home run a season. At least, that is the estimate based on the method I laid out above; however, it’s probably best to say that there was no observed effect.

In the comments section, Bradbury crunches the walk numbers to control for the possibility that a more powerful A-Rod was less selective at the plate and, again, finds no observable effect. There are some moderately outlandish hypotheses that could account for this, such as the league’s pitchers cycling steroids coincident with Rodriguez, so that a roided-up A-Rod would hit against roided-up pitchers and a clean A-Rod would hit against clean pitchers, but, well, Occam’s Razor.

From Yahoo’s List of the Day:

8) There were too many people on the stage. After five members in a band most rock ‘n’ roll groups get noticeably worse with each additional member. Van Morrison is the exception to this rule and Bruce has skirted it by employing top notch guys like Miami Steve and Nils Lofgren. However, he had at least six guitar players onstage. All playing the same parts. Add on the horn section and we’re talking chaos.

And, what happens when musicians are crowded out? Bad things. Especially for Clarence Clemons.

2) He sticks poor Clarence on COWBELL. For “Glory Days,” suddenly Clarence is shuttled off his beloved saxophone, a horn section is bought out front and Clarence is given the lowly COWBELL. Now, the Cowbell has always been an in-joke for all rock bands ever since Saturday Night Live and Blue Oyster Cult deemed “more cowbell” a worthy epithet. Do you think anyone in that stadium heard that cowbell? I bet even Clarence couldn’t hear the damn thing.

Signalling in economics is the idea that, given imperfect information and a cost to disseminate that information, there are ways for high-quality agents to show (signal) others of their high quality.

This fellow doesn’t know it, but he’s trying to break signalling theory. Can he succeed? I don’t think so. My reasoning (second-order signalling) and a haiku behind the cut.

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Ed Edmonds at the Sports Law Blog wrote up a piece on Tampa Bay’s “File-and-Go” strategy for arbitration. The blog references an MLB.com article; more information is available at USA Today, but I’ve preserved the text of the article here. Some thoughts on arbitration as market inefficiency, plus a haiku, behind the cut.

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In the previous post, I mentioned the Singapore government’s fear that too high a level of compensation for kidneys would provide an “undue inducement” for a citizen to sell a kidney. I assume this means that the government doesn’t want to set a price so high that it will cause an unethically high influence on a person’s decision to donate an organ.

In microeconomics as we know it, however, the market-clearing price of a widget is the point at which its supply curve intersects its demand curve - that is, the price where suppliers want to sell exactly as many widgets as customers want to buy. Price theory doesn’t take ethics into account. From the academic standpoint, it’s impossible for a price to be an undue inducement because price is based on the indifference point of the supplier.

Can a price be an unethical inducement to action? How can that be determined? Is it right, ethically, to set price controls under certain circumstances?

Singapore is lifting its ban on compensating kidney donors. Behind the cut, I’ll analyze some of the effects, examine the welfare generated by such a policy, and include a summary in the form of an economics haiku.

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My Macroeconomic Theory final had an extra credit question asking us to apply one of the models from the class to the Obama stimulus proposal. I’m something of an econeophyte, but I do remember this coming up in, inter alia, Alan Harvey’s Demand Side Economics podcast (which I listened to mainly to balance EconTalk, which I listen to mainly because Russ Roberts is brilliant).

In addition, I am a twin. Why this is relevant will become clear behind the cut.

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