Agnitio on tour: Economic Musings from the US

I’m currently in the US on business/visiting family and thought I might share with our kiwi readers back home some interesting things (from an economics perspective of course!) that I have come across in my travels. I’ll post any other random things I come across while in the land of the free.

A few things have jumped out so far:

  • If you stay at a really expensive hotel (e.g. a hotel in times square) you do not get free broadband but if you stay at a cheap hotel (e.g. not in the middle of the cbd) you get free broadband
    given the vast difference in price I was a little surprised I wasn’t getting broadband. I guess this probably affects the elasticity of demand of the different customer types that go to the different hotels. People who stay in the middle of NYC are probably mainly concerned about location (business travelers or rich people on holiday) and thus relatively captive demand so the hotels can gauge people on the internet. For the other hotels location isn’t such an issue so the hotels have to compete to attract customers and offering free broadband is a simple (non-price) way to do this.
  • All car ads focus on the miles per gallon (mpg) rating of the car
    record gas prices are finally making Americans conscious of the amount of gas their huge SUVs use, if you want a more compact but still effective vehicle tp drive, read here about the Ford Mustang GT 2+2 Fastback. Apparently large vehicle sales are plummeting. So much so that Ford is in bad condition financially since most of their sales are trucks. To counter this ford is going to start bringing it’s small fuel efficient European models into the US in a bid to turn things around.

    Sad for Ford shareholders, but if people are going to start driving normal sized cars that’s good for the environment!

  • The public debate around oil prices seams to focus on how to bring the price of gasoline at the pump down rather then finding ways to lessen our dependence on oil.
    Can you tell it’s an election year? Obama and McCain talk about the sustainable energy in the press releases for their campaigns but all you hear about on the news is how to bring the price down.

    Republicans want to open up the coast of the US for drilling; democrats want to control the oil speculators (who apparently are the cause of up to 50% of the increase in the price of oil……). Maybe we should spend time finding ways to not be dependant on oil?

As an aside I’ve found that because food portions are so gigantic here, when I go out drinking I’m not very hungover the next day since I had sooo much to eat for dinner. It’s a vicious cycle health wise as it means I just eat and drink again the next day, this trip is doing wonders for my health!


3 replies
  1. billbennettnz
    billbennettnz says:

    “If you stay at a really expensive hotel (e.g. a hotel in times square) you do not get free broadband but if you stay at a cheap hotel (e.g. not in the middle of the cbd) you get free broadband”

    This is interesting. Are other things bundled into upmarket hotel prices (ie chocolates on the pillow, fancy shampoo etc) or do they charge extra for everything?

    Do you really think it’s about demand elasticity? If swanky hotels don’t compete on the feature set, what do they compete on?

  2. agnitio
    agnitio says:

    I had nice shampoo but no chocolates on my bed. Any hotel will give you shampoo. I think it’s really just the fact that the downtown hotels have a captive demand, i.e i’m in town on business so i have to stay close to the office. In a way innner cities hotels are an ologopoligy (in manhatten atleast!)

    I guess what I’m saying is that the swanky hotels have very limited competition so they don’t need to offer these additional feautures

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