EconAir

  One of the biggest shifts since 2013 is that a majority (52%, up from 39%) now say they are “willing to spend extra for a brand with an image that appeals to me.” Ipsos,  Global Trends, September 19, 2025. STARTING POINT Pareto's Law, the 80/20 rule, is the starting point for marketing and price discrimination. As discussed in a related post on basic concepts, Pareto's Law says, among other things, that a relatively small percent of customers account for a relatively large percent of sales and profits. One reason is the concentration of income and wealth. Recent studies indicate increasing concentration of income and wealth in the United States. A company's choice of target market and market niches is critical to marketing and pricing strategy.   CONTENTIONS Pricing is a strategy, not something a company accepts or beyond its control. Price discrimination is one pricing  strategy. Price discrimination can be practice by individual companies or all compa...

THE ECONOMICS OF FINANCIAL MARKETS MARKET-MAKERS, BIASED INFORMATION, AND FORECASTS This tutorial will look at financial markets and how they actually function.  There are two general theories about how financial markets work. The first is the Efficient Market Theory, which assumes all decision-makers are rational – they have access to information, can analyze it, and make investment decisions. Strangely, a major conclusion is that investors cannot predict stock price movements, which are random. The second is Behavioral Finance, which assumes that investors are irrational – they have a number of biases and are influenced by the markets’ past behavior. Both theories based on this supposed distinction that “explain” financial price behavior are irrelevant. What is left out of theoretical models of financial markets is how financial markets actually operate. Between buyers (investors) and sellers (including issuers of new securities), there are market makers like brokerage firms, man...