Economies of scale in the on-demand economy

http://www.bloomberg.com/view/articles/2016-06-29/uber-isn-t-going-to-conquer-the-world

Does what Kalanick say about Uber apply to Facebook? Airbnb? Microsoft Windows? Google Chrome? Verizon cell phone service? A brand of cell phone?

What determines the drugs your doctor prescribes for you?

Even Cheap Meals Influence Doctors' Drug Prescriptions, Study Suggests
by: Peter Loftus
Jun 21, 2016
Click here to view the full article on WSJ.com

TOPICS: Moral Hazard, Statistics

SUMMARY: Doctors who received a single free meal from a drug company were more likely to prescribe the drug the company was promoting than doctors who received no such meals, according to a study.

CLASSROOM APPLICATION: Students can critically evaluate the study examining the relationship between industry-sponsored meals and physician prescriptions. In particular, instructors can stress the difference between a correlations between meals and prescriptions and the causal effect of meals on prescriptions. Students can also discuss whether

QUESTIONS: 
1. (Introductory) The study reports, "Receipt of industry-sponsored meals was associated with an increased rate of prescribing the brand-name medication that was being promoted. The findings represent an association, not a cause-and-effect relationship." Does this statistical association between meals and prescription decisions imply that the meals influence doctors' drug prescriptions?

2. (Advanced) Is it possible that pharmaceutical reps promote (i.e., detail) drugs that are most effective? If so, could the detailing improve economic efficiency by its promotion of effective drugs?

3. (Advanced) What types of studies should be done to determine (1) whether pharmaceutical detailing has a causal effect on the prescriptions physicians write, and (2) whether detailing improves economic efficiency by providing information about pharmaceuticals?

Reviewed By: James Dearden, Lehigh University

How changes in wages and technology affect employment decisions

At Western Firms Like Adidas, Rise of the Machines Is Fueled by Higher Asian WagesAt Western Firms Like Adidas, Rise of the Machines Is Fueled by Higher Asian Wages
by: Kathy Chu and Ellen Emmerentze Jervell
Jun 10, 2016
Click here to view the full article on WSJ.com

TOPICS: International Trade, Manufacturing

SUMMARY: Global companies, such as Adidas, are doing more manufacturing closer to home thanks to advances in automation and increasing pay demands from workers in the developing world.

CLASSROOM APPLICATION: Students can evaluate the effect of innovation in manufacturing processes (i.e., increased automation), wages in the developing world, and the marketing benefits of manufacturing closer to home on the decision by companies to move manufacturing from the developing world to their home countries.

QUESTIONS: 
1. (Introductory) What is the effect of increased manufacturing in the developing world on wages in these countries?

2. (Advanced) Why is automation critical for companies to move manufacturing from the developing world to their developed countries?

3. (Advanced) What is the effect of increased wages on the mix of capital and labor used in production processes?

Reviewed By: James Dearden, Lehigh University