Can Country A do something to Country B at the WTO because the latter is not passing on full fuel price to the customer, leading to no decline in supply? demand and consequently high prices of oil for Country A?
How do these kind of things work? Is it possible for one country to destroy market in another by controlling prices within the first country?
(new comment policy stands for now; in case you can’t comment, mail me at skthewimp [at] yahoo [dot] com)
Blame the Bangarappa government of 1993, which took a decision to stop issuing more liquor licenses, a decision that still continues today.? According to
?(who runs the excellent Shiok, currently temproarily closed), the only way one can start a restaurant serving liquor in Bangalore is to buy a permit from someone who is shutting shop. In other words, the number of establishments serving liquor in Bangalore has remained constant for some 15 years now, despite the population growing by a large amount.
Apart from the fact that the supply of licenses is scarce, a bigger problem is in matching buyers and sellers. It is reported that officials in the excise department double up as a clearing house for these licenses, charging usurious commissions up to the tune of 25% of the transaction value. Adding to this the official costs of licensing, transferring license and other sundry costs, a liquor license is estimated to cost approximately about Rs. 30 lakh.
What this means is that existing establishments can continue to overcharge on liquor without the fear of a new competitor who might threaten to lower the prices in the industry. However, given that liquor consumption, especially at restaurants, is highly elastic, there is only so much by which the liquor can be marked up. Thus, for the thousands of entrepreneurs who have started thousands of fine dining restaurants in the last few years, the only way in which they can recover their liquor investment, and make a profit would be to mark up the prices of food items.
Another thing with fine dining is that restaurants that serve liquor vastly outnumber the ones that don’t. This is mainly because of the clientile of these? restaurants, who usually prefer a drink to go with their food. This market (fine dining) is highly elastic to the availability of liquor – restaurants stand to lose considerable business if they don’t serve liquor. What this means is that restaurants serving liquor are dominant in this market, and they are the price setters. So when you have the high-cost players in the industry being the price setters, it is clear as to why prices are on the higher side.
On the other hand, when it comes to fast food, south indian food and south indian – north indian food (north indian food made in south indian style), the presence of restaurants that serve liquor is negligible, almsot non-existent. Hence, the price setters in this market are low-cost players, which explains why they are very reasonable.
Then, in Chennai, the? government has a monopoly over liquor distribution, which means that restaurants aren’t allowed to sell liquor. This makes it okay for a fine dining restaurant to run without serving liquor, and hence the price setters in the market are not high-cost. This probably explains why fine dining is much more reasonable in Chennai compared to Bangalore.
The only missing piece in this puzzle is the Andhra style restaurants – most of them serve liquor and are yet extremely reasonable. Or is it that they serve only beer which has a separate license that is available more freely? Can someone tell my why this is the case?
And interestingly, Bangarappa, who put a freeze on further liquor licenses, belongs to the Idiga community whose traditional occupation is to brew/extract and distribute liquor.
For the last one year or so, I’ve been relying on bloggers such as Tyler Cowen for my books recommendations. Basically I read about a book on a blog, or say Marginal Revolution does a book forum on the book, and I soon get interested in the book, and go out to buy it. And the fact that I’ve been fairly regularly winning book coupons at quizzes provides an easy financing for these books.
Some of the books that I have bought and read through these recommendations include Super Crunchers, The Black Swan and The Long Tail, all books that I have really enjoyed. Apart from this, I’ve bought and read books written by people whose blogs I read – and this includes Discover your inner economist and The Logic of Life. And I’ve noticed that in general, the books recommended in the blogs that I read are more enjoyable than the books writen by the bloggers themselves. Maybe this has to do with the fact that if I’m regularly reading someone’s blog, there isn’t that much value I can get from the book.
Now, my problem is that a large number of books that I want to read don’t have Indian editions. At least with “popular” books such as “Discover your .. ” the Indian edition came out in due course of time, and I was able to read them. Unfortunately, it seems like the market for a number of such books in India is so small that they don’t bother bringing out an Indian edition.
The gentleman at Gangaram’s book store told me that if I wanted, he would be able to procure the US editions of these books. However, the dollar rate, plus the $10 for shipping means that these books would cost me on an average, > Rs. 2000, which is much much higher than my willingness to pay which stands at Rs. 400. Again, given that US editions are typically much more expensive than Indian editions, asking a friend in the US to buy them (or ordering through Amazon) and sending it to me through another friend or something will again be too expensive. So I wonder what I could possibly do to read the books that I want to read.
Here are the books that are on my “want to read” list currently but I’m not able to procure them.
I first wrote about water privatization on this blog back in 2006. I had written that bit as part of a term paper for an infrastructure course at IIMB, and it seemed like we didn’t do too well as far as the term paper went.
I revisited the topic sometime last year when i talked about water privatization in Kundapur. I cross posted that on the Indian Economy Blog also.
My main argument there was that privatization of water would ensure an OPTION for everyone to access clean piped drinking water, and this option value would offset the higher prices faced by those who already have the connection – who are mainly the reasonably well to do.
The latest to comment on this matter is Tyler Cowen. Writing in the Forbes, he calls for unregulated privatization of water supply in developing countries. And he mentions precisely the same reasons as I did in my earlier posts.
I hope Prof. Ranga, who didn’t give us enough credit for our term paper back then, is reading this.
I’m in the process of reading the Goldman Sachs report about what India should do to become a superpower by 2050. Have read some 4 pages of it so far.
In temple towns such as Horanadu and Sringeri, the temple has a virtual monopoly over accommodation for tourists. There have been a few private lodges springing up in both places of late, but indifferent quality means these are places of last resort for tourists. The temple accommodation, however, is well maintained and clean, and most importantly comes cheap. The undifferentiated twin bed room goes for about Rs. 100 per night in both places.
This is a tubelight post. Was supposed to have written this two months back.
I sometimes wonder if the US Fed did the right thing by encouraging JP Morgan to buy out Bear Stearns rather than to just let the latter fail. I know letting it fail would have had significant negative impact on the already struggling financial sector. But wouldn’t it have sent out a nice message for the longer term? That nobody was too big to fail? Wouldn’t this have significantly improved the quality of derivatives contracts in the long term?
The concept of opportunity costs seems to be non-trivial, in the sense that most people don’t seem to get it. When I first learnt it as part of my Economics course at IIT Madras, I thought it was fairly common sense. However, looking around at a variety of people, it doesn’t seem to be that common.
I propose a new business model. Make a seemingly outrageous long-range prediction. It could just be anything, but you might want to stick to the financial world. Once you have decided on the prediction to make, think up of about six possible reasons why this prediction could come true. Given that the prediction in itself is outrageous, it shouldn’t be hard for you to come up with six outrageous reasons to support the same.
This morning, on the way to the gym, i saw a pleasant and wonderful sight. In fact, it was a curious problem but the solution gave me hope that the average intelligence in India is not too low.
It was shortly passed 7 am, and the traffic lights at South End Circle had just come on. However, the intersection itself was empty as vehicles stood on all six roads waiting for the light to turn green. After half a minute of observance, I think everyone figured out that there was a problem with the lights.
Soon traffic started flowing from the Madhavan Park side. No, there was no green light. However, the fact that it was red all around must have helped to keep the traffic from the other directions quiet. In ten seconds, all traffic from the Madhavan Park side had passed the intersection, and traffic flowed from Elephant Rock road (from the direction of Elephant Rock). Note that this was the natural order at that signal – the light turns green for the Madhavan Park side followed by the elephant rock side.
In another? twenty seconds, traffic from elephant rock had ceased, and people from both sides of RV Road began to move. Together. As it always happens when there are functioning lights or a policeman. As usual, this took longer than other directions, and then traffic flowed from the Yediyur side.
It was beautiful. It was as if there were functioning lights, or a traffic policeman in his place. It was probably self-regulation at its best. The fact that the light was red all around helped I think – people thought twice before jumping the signal. I thought it was one perfect round completed successfully as I started moving my car as soon as the Yediyur side emptied. Unfortunately, one BMTC bus on RV Road (coming from Lalbagh side) happened to jump the signal at that moment, and spoilt the few moments of bliss. Thankfully no one else followed suit, and traffic from my side passed peacefully.
I’m not sure what happened next but just the fact that Bangalore traffic, which has almost gone the Delhi way thanks to massive immigration from those parts and also the presence of Tata Sumos, could regulate itself perfectly for a minute or two was inspiring. Maybe it was a skewed sample. Yes, I don’t have enough data points. But it made me feel good.??
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