Markets on the Margin

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Video 1—Recreational DrugsProf. Jonathan Anomaly

Markets for recreational drugs like heroin and cocaine can also teach us about controversial markets more generally. Drug use is controversial because of the harms it can cause, and also due to moral objections. Most countries have responded to these concerns by making the use of certain recreational drugs illegal.  But there are unintended consequences to such laws, including the rise of black markets, gang violence, and substitution effects that lead to the development of even more dangerous drugs. The PPE approach can help students weigh the moral and practical consequences of different policy approaches regarding drug use. Watch video …


Video 2—Price GougingProf. Michael Munger

Should price gouging be illegal? In many places, raising the price of a good during an emergency is against the law, and those laws are very popular politically. It just seems wrong to charge people more in a desperate situation. But letting prices rise sharply during a shortage allows three things to happen that actually help everyone in the long run: rising prices cause consumers to economize, they incentivize producers to make more fast and transport it where it’s needed, and they encourage entrepreneurs to make substitutes. Watch video …


Video 3—Economic Development and Foreign PolicyProf. Christopher Coyne

One question that many scholars, NGOs, and governments have tried to answer is how to promote economic development in poor countries. What, if anything, can be done to help? Instead of viewing development as something that is “created” or “planned” through technical expertise, Prof. Coyne argues it’s more accurate to view development as a bottom up process of people experimenting and discovering new and improved ways to allocate scarce resources. Viewing development this way changes how some policies are weighed against others. For example, some development economists argue that the most effective step wealthier countries could take to help poorer countries is not direct aid, but opening up markets both for goods and for migration of workers. Watch video …