Quotulatiousness

September 13, 2017

Tesla’s experiment in price discrimination

Filed under: Business, Economics, Technology — Tags: , , , , , — Nicholas @ 05:00

Alex Tabarrok links to a story about Tesla using an over-the-air software update to help Tesla owners in hurricane-threatened areas get more range from their lower-battery capacity cars … but he says this may eventually come back and bite the company:

Tesla knows that some of its customers are willing to pay more for a Tesla than others. But Tesla can’t just ask its customers their willingness to pay and price accordingly. High willing-to-pay customers would simply lie to get a lower price. Thus, Tesla must find some characteristic of buyers that is correlated with high willingness-to-pay and charge more to customers with that characteristic. Airlines, for example, price more for the same seat if you book at the last minute on the theory that last minute buyers are probably business-people with high willingness-to-pay as opposed to vacationers who have more options and a lower willingness-to-pay. Tesla uses a slightly different strategy; it offers two versions of the same good, the low and high mileage versions, and it prices the high-mileage version considerably higher on the theory that buyers willing to pay for more mileage are also more likely to be high willingness-to-pay buyers in general. Thus, the high-mileage group pay a higher price-to-cost margin than the low-mileage group. A familiar example is software companies that offer a discounted or “student” version of the product with fewer features. Since the software firm’s costs are mostly sunk R&D costs, the firm can make money selling a low-price version so long as doing so doesn’t cannibalize its high willingness-to-pay customers–and the firm can avoid cannibalization by carefully choosing to disable the features most valuable to high willingness-to-pay customers.

The kind gesture to Tesla owners in Florida is probably deeply appreciated right now, but…

Unfortunately, I fear that Tesla may have made a marketing faux-pas. When it turns off the extra mileage boost are Tesla customers going to say “thanks for temporarily making my car better!” Or are they going to complain, “why are you making MY car worse than it has to be?”

Human nature being what it is, the smart money is betting on the “Thanks for the temporary upgrade, but what have you done for me lately?” attitude setting in quickly.

July 30, 2017

It’s time to eliminate the ethanol fuel mandate (and all those corporate welfare subsidies)

Paul Driessen explains why now might be the best time to get rid of the Renewable Fuel Standard (RFS) which requires a proportion of ethanol be incorporated/blended into almost all petroleum fuels in the US (Canada has similar requirements):

The laws require that refiners blend steadily increasing amounts of ethanol into gasoline, and expect the private sector to produce growing amounts of “cellulosic” biofuel, “biomass-based diesel” and “advanced” biofuels. Except for corn ethanol, the production expectations have mostly turned out to be fantasies. The justifications for renewable fuels were scary exaggerations then, and are absurd now.

Let’s begin with claims made to justify this RFS extravaganza in the first place. It would reduce pollution, we were told. But cars are already 95% cleaner than their 1970 predecessors, so there are no real benefits.

The USA was depleting its petroleum reserves, and the RFS would reduce oil imports from unstable, unfriendly nations. But the horizontal drilling and hydraulic fracturing (fracking) revolution has given the United States at least a century of new reserves. America now exports more oil and refined products than it imports, and US foreign oil consumption is now the lowest since 1970.

Renewable fuels would help prevent dangerous manmade climate change, we were also told. This assumes climate is driven by manmade carbon dioxide – and not by changes in solar heat output, cosmic rays, ocean currents and other powerful natural forces that brought ice ages, little ice ages, warm periods, droughts and floods. It assumes biofuels don’t emit CO2, or at least not as much as gasoline; in reality, over their full life cycle, they emit at least as much, if not more, of this plant-fertilizing molecule.

[…]

A little over 15 billion gallons of corn-based ethanol were produced in 2016 – but only 143 billion gallons of gasoline were sold. That means using all the ethanol would require blends above 10% (E10 gasoline) – which is why Big Ethanol is lobbying hard for government mandates (or at least permission) for more E15 (15% ethanol) gasoline blends and pumps. Refiners refer to the current situation as the “blend wall.”

But E15 damages engines and fuel systems in older cars and motorcycles, as well as small engines for boats and garden equipment, and using E15 voids their warranties. You can already find E15 pumps, but finding zero-ethanol, pure-gasoline pumps is a tall order. Moreover, to produce ethanol, the United States is already devoting 40% of its corn crop, grown on nearly 40 million acres – along with billions of gallons of water to irrigate corn fields, plus huge amounts of fertilizer, pesticides and fossil fuels.

Much of the leftover “mash” from ethanol distillation is sold as animal feed. However, the RFS program still enriches a relatively few corn farmers, while raising costs for beef, pork, poultry and fish farmers, and for poor, minority, working class and African families. Ethanol also gets a third less mileage per gallon than gasoline, so cars cannot go as far on a tank of E10 and go even shorter distances with E15.

The problem with getting rid of targeted subsidy programs is that the benefits are highly concentrated while the costs are widely dispersed. As a whole, the North American economies would benefit greatly from eliminating the RFS mandates, lowering overall fuel costs, improving international food availability, and reducing or eliminating crony capitalist benefits to “Big Ethanol”, but most individuals’ gains would be small — too small to gain much active support — and the current beneficiaries would have vast incentives to fight to the death to keep those subsidies flowing.

July 19, 2017

What is the best British sports car? Clarkson’s Car Years – BBC

Filed under: Britain, Humour, Technology — Tags: , — Nicholas @ 02:00

Published on 14 Apr 2008

Jeremy Clarkson has all the answers in this clip from Clarkson’s Car Years. His conclusion is typical Clarkson!

July 14, 2017

The Peltzman Effect

Filed under: Economics, Government, Health, USA — Tags: , , , — Nicholas @ 05:00

The odd situation where increasing the safety of an activity by adding protective gear is offset by greater risk-taking by the participants:

In the 1960s, the Federal Government — in its infinite wisdom — thought that cars were too unsafe for the general public. In response, it passed automobile safety legislation, requiring that seat belts, padded dashboards, and other safety measures be put in every automobile.

Although well-intended, auto accidents actually increased after the legislation was passed and enforced. Why? As [Professor of Economics Steven E.] Lansburg explains, “the threat of being killed in an accident is a powerful incentive to drive carefully.”

In other words, the high price (certain death from an accident) of an activity (reckless driving) reduced the likelihood of that activity. The safety features reduced the price of reckless driving by making cars safer. For example, seatbelts reduced the likelihood of a driver being hurt if he drove recklessly and got into an accident. Because of this, drivers were more likely to drive recklessly.

The benefit of the policy was that it reduced the number of deaths per accident. The cost of the policy was that it increased the number of accidents, thus canceling the benefit. Or at least, that is the conclusion of University of Chicago’s Sam Peltzman, who found the two effects canceled each other.

His work has led to a theory called “The Peltzman Effect,” also known as risk compensation. Risk compensation says that safety requirements incentivize people to increase risky behavior in response to the lower price of that behavior.

Risk compensation can be applied to almost every behavior involving risk where a choice must be made. Economics tells us that individuals make choices at the margin. This means that the incentive in question may lead the individual to do a little more or a little less of something.

[…]

The fact that incentives reduce or increase behavior is an economic law: Landsburg posits that “the literature of economics contains tens of thousands of empirical studies verifying this proposition and not one that convincingly refutes it.” Incentives change the effectiveness of government policy and shape day-to-day life.

July 12, 2017

Triumph Staaaaag – Clarkson’s Car Years – BBC

Filed under: Britain, Technology — Tags: , , — Nicholas @ 02:00

Published on 14 Apr 2008

Jeremy Clarkson has his say about the wonders and worries of the Triumph Stag. Apparently, it sounds better if you stay on the vowel!

June 18, 2017

Fiat 500 – The Original Small Car – James May’s Cars Of The People – BBC Brit

Filed under: Europe, History, Technology — Tags: , — Nicholas @ 04:00

Published on 19 Jul 2015

James May takes a spin in one of the original small cars, the very mini, Fiat 500.

Taken from James May’s Cars of the People

June 17, 2017

“Probably the best example of our carny-barker economy is Tesla”

Filed under: Business — Tags: , , , , , — Nicholas @ 03:00

The Z-Man on the post-modern business models used by Amazon, Facebook, and Tesla:

The key for Amazon making it all these years was to keep people focused on everything but their financials. This is not an exception. Faceberg will never have earnings to justify its share price. In fact, it will never have user rates to justify its ad revenue. It’s not unreasonable to think that everything about the business is fraudulent. That should trigger large scale audits and investigations into its business practices, but Facebook is on the side of angels in the cultural revolution, so its all good.

Probably the best example of our carny-barker economy is Tesla. To his credit, Musk has built a real factory that builds real cars. No one is going to say the Tesla is a work of art or even a practical car, but it is a car and the technology is impressive. The trouble is the company does not exist to make cars. It operates as a tax sink, where government subsidies flow into it and some portion of those subsidies turn into payments to the principles in the form of stock repurchases, debt service and compensation.

This only works if people think the venture will either one day turn a profit or the technology that it creates will result in something good down the road. To that end, Musk is regularly out doing his Lyle Lanley act, making all the beautiful people feel righteous by backing his ventures. He’s also telling Wall Street that he will soon be making and selling enough cars to turn a healthy profit, even without massive tax subsidies. The trouble is, that’s probably never happening, at least not with current management.

June 12, 2017

Richard Hammond’s latest close call

Filed under: Europe, Media, Technology — Tags: , , , — Nicholas @ 03:00

The BBC is reporting on an accident involving an electric supercar:

Former Top Gear host Richard Hammond has been flown to hospital after a crash while filming in Switzerland.

The 47-year-old was on a practice run for a race in an electric car for Amazon Prime show The Grand Tour.

Mr Hammond “climbed out of the car himself before the vehicle burst into flames”, the show said in a statement.

Co-host Jeremy Clarkson tweeted that it was the “most frightening” accident he had ever seen but said Mr Hammond, who fractured a knee, was “mostly OK”.

The show’s statement said Mr Hammond had been involved in a “serious crash” after completing the Hemberg Hill Climb in Switzerland, where a race takes place on Sunday.

He had been driving a “Rimac Concept One, an electric super car built in Croatia, during filming for The Grand Tour Season 2 on Amazon Prime, but very fortunately suffered no serious injury”.

Some video footage was released on the DriveTribe site:

And Hammond himself was able to speak from his hospital bed on Sunday:

June 1, 2017

AK47 Vs. French Cars – James May’s Cars Of The People – BBC

Filed under: Randomness — Tags: , , — Nicholas @ 02:00

Published on 24 Jul 2016

James May sets up a simulation of the terrible attacks that would of been inflicted upon some of these cars in war.

Taken from James May’s Cars of the People.

May 31, 2017

The Wood Whisperer 269 – Pet Steps

Filed under: Technology, Woodworking — Tags: , — Nicholas @ 02:00

Published on 16 Sep 2016

For FREE plans and additional details, head to http://www.thewoodwhisperer.com/videos/pet-steps/

Welcome to the Honda Ridgeline Saturday Project series produced in partnership with Honda. Each project is designed to be approachable using basic tools and materials. And to show you how versatile the all-new 2017 Honda Ridgeline can be, we’ll build each project right in the bed of the truck!

Sometimes our pets need a little help getting to high places like the family bed or the inside of a vehicle. This easy-to-build set of Pet Steps can also serve as a ramp and even stores flat when not in use. Made with simple materials and basic tools, anyone can knock this project out in a weekend. The inspiration for this design came from various sources on the web and was brought to life by my buddy Scott Seganti.

May 25, 2017

Words & Numbers: Government Can’t Stop Creative Destruction

Filed under: Business, Economics — Tags: , , , — Nicholas @ 05:00

Published on 24 May 2017

Technology doesn’t just change things, it utterly destroys things. And that’s just fine. It happens so often that people barely even notice when it does. Think about all the new services that have come to market just over the past few years: Uber, Airbnb, Redbox … the list goes on and on.

But that’s only half the story. In turn, the list of services replaced by these new ones is similarly long: taxis, hotels, Blockbuster, etc. And workers in these industries often lose their jobs in the line of creative destruction. We generally accept this as the price of innovation, but many people try to use the government to stop this by blocking the new services.

Today we’re seeing this with more politically well-connected industries like taxis and hotels. Pressure is put on Uber and Airbnb, respectively, to “protect” the established industries they are upending.

This week, Ant and James talk about why this is always a mistake.

Learn More:
https://fee.org/articles/government-cant-stop-creative-destruction/

May 19, 2017

Marijuana use promotes incoherence … on the part of non-users

Filed under: Cancon, Law, Liberty, Science, USA — Tags: , , , , — Nicholas @ 03:00

Chris Selley rounds up some of the less-than-realistic concerns of the anti-legalization folks:

The move toward marijuana legalization is … still not as coherent as it could be, let’s say. The Liberal legislation, unveiled last month, would establish rules around THC-impaired driving that may well prove unconstitutional: science has yet to establish a solid link between a given level of THC concentration in a driver’s blood or saliva and his level of impairment. Frustratingly, there are still those who use this as an argument against legalization — as if it would create pot-impaired drivers where there are none today.

Last week on CTV’s Question Period, host Evan Solomon asked former U.S. ambassador Bruce Heyman what would happen if someone showed up to the border with his car or his clothes smelling of marijuana. It’s a variation of a question that’s been asked often: As it stands, Canadians who admit having smoked marijuana in the past are sometimes turned back. What would happen after legalization?

The de facto answer is, as always: Whatever the hell the U.S. border guard in question wants to happen. (It amazes me how many Canadians haven’t yet figured this out.) And furthermore: “Don’t rock up to the U.S. border reeking of pot, you utterly unsympathetic tool.”

The de jure answer: Well, who knows? Why would Canada’s decision to legalize marijuana have any bearing on the admissibility of foreign pot-smokers to the United States of America?

Heyman’s answers were more, er, nuanced than mine. Bafflingly, he started talking about sniffer dogs and their performance limitations: They won’t care that pot’s legal, so they’ll still detect marijuana, and that will bog down the border.

Now, marijuana legalization certainly might lead to a bogged-down border — if humans, not canines, decide to bog it down. For example, one can imagine Donald Trump thinking legalization necessitated much more aggressive screening of incoming motorists, and not caring too much about the trade implications. Whether that makes any sense is another question.

May 12, 2017

Jeremy Clarkson talks speed camera politics – Top Gear – Series 1 – BBC

Filed under: Britain, Law, Liberty — Tags: , , — Nicholas @ 02:00

Uploaded on 12 Apr 2007

The Top Gear boys, Jeremy Clarkson, Richard Hammond and James May discuss the politics of speed cameras…

May 5, 2017

Jeremy Clarkson on Bad Drivers

Filed under: Humour — Tags: , — Nicholas @ 02:00

Uploaded on 15 Mar 2010

A discussion with a lot of truth in it.

May 1, 2017

Math is hard … and in Oregon it can lead to hard time

Filed under: Bureaucracy, Government, Law, Liberty, USA — Tags: , , , , — Nicholas @ 05:00

Did you know that you have to be certified by an Oregon regulatory agency to do certain kinds of math? Mats Järlström has discovered just how draconian the state can be about unauthorized mathematizing:

After exploring the math behind traffic light timing, Järlström concluded that the formula, created in 1959, accounted for only two yellow light scenarios: driving straight through the intersection, or stopping.

So Järlström decided to try to improve the math managing the transition time from yellow to red, in order to allow a driver traveling through an intersection with a yellow light to slow down and turn without being flagged for a red light violation. And in early 2015 he shared his proposal with the media, policymakers, and those interested in the traffic technology.

“It’s not rocket science,” Järlström said in a phone interview with The Register. “It took me about 40 minutes to figure it out.”

For communicating his findings in five emails, the Oregon State Board of Examiners for Engineering and Land Surveying in March, 2015 opened an investigation. In August 2016, the rules body found [PDF] that Järlström had engaged in unlicensed engineering and assessed a $500 fine.

Even better, if he persists, he may even face jail time for his unlicensed mathematical crime spree.

Järlström paid the fine but fears his ongoing interest in traffic light timing will lead to further penalties. Violating the Act could subject him to $1,000 in civil penalties, $6,250 in criminal fines, and as much as a year in jail.

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