New Year, New Steam Sale

Cross post from Substack

I keep receiving emails that Star Wars Squadron is only $2.50. Wild! I love Star Wars, and when I was a kid I loved flying around all the planes and stuff.

But why such a big special? And why are lots of computer games on a big sale now?

I mean surely this is the time when demand is high (a lot of people are on holiday) and computer games are a durable good (you pay up front, and then consume them over time).

As a result, this must be the time when people are most willing to pay for it – and the incentive to discount must be pretty weak because if you sell a game to someone now, you can’t sell it to them again in the future.

So let’s have a think about why this may be going on – and I promise not to talk about tacit collusion this time. Instead lets talk price discrimination.

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How did our 2023 forecasts go?

Cross posted on Substack.

At the close of 2022, Gulnara and I thought it would be fun to pop up some forecasts for 2023. So what were they and how did we do?

The forecasts

It appears we made four forecasts:

  1. That the “rebalancing towards consumption” in China would dominate the discussion post-COVID economic adjustment – making it harder to bring inflation down in a low cost manner and keeping tradable inflation high.
  2. Automation would be a major theme – with a clear visual number of worker tasks across a number of jobs now being clearly automated.
  3. Industry policy would be the go to policy lever pointed at given the two above economic themes.
  4. However, there would also be increasing discussion of unemployment benefits – and the importance of the safety net for supporting these transitions.

Right, nice consistent story – two changes in the underlying economy, two policy responses.

How did we do? I’m going to self-evaluate – but super keen for everyone elses thoughts in the comments!

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Where have all the good Boxing Day sales gone

Cross post from Substack.

It’s Boxing Day – and I’ve already used up the idea of discussing the now largely missing Boxing Day sales. And the idea that Boxing Day is increasingly lame is common across years.

So instead the focus of today will be on a different industrial economics topic – the state of competition in Australia. Specifically, does the lack of Boxing Day sales tell us something about the level of competition in Aussie?

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Unrealised losses, high interest rates, and financial market distress

Cross-posted from substack.

I’ve been seeing a lot of the following around the place:

Looks pretty scary right – red columns go lower than during the Global Financial Crisis :O

However, these big red columns are a bit misleading. The data is true – financial institutions holding government bonds have made large unrealised losses on government bonds due to the surge in interest rates. But there is a reason that financial regulations don’t make banks recognise these losses.

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What can a new lawnmower tell us about labour markets?

Cross posted from Substack.

A few years ago Gulnara and I made a video on unemployment. Although this was a particularly unpopular video, it was actually one of our favourites – and we keep thinking about ways we want to expand the story of our friend JM.

In this video we give examples of how JM, a lawn mower man, could end up unemployed. A key example we gave was the creation of autonomous lawnmowers. We were then shocked when we walked into a store to see the following:

So what does the existence of automated lawnmowers tell us about JM, and how does it help us think about labour markets?

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Cost of job loss: Wage scarring

Cross posted from Substack.

Previously we’ve talked about the cost of job loss in terms of revealed consumption responses – i.e. how do individuals cut their spending following job loss. This is a useful concept, and there is going to be more to say on this in the next year.

But a more basic point people may ask with respect to the cost of job loss – how much lower is someone’s lifetime income if they end up getting shoved out of their job!

Let’s chat about that while investigating some initial work my colleagues and I have undertaken at e61. For those who know things already, or don’t want to read, here is the picture you are after:

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