As the Dust Settles

http://liberalorder.typepad.com/the_liberal_order/economics/index.html

This articles talks about the how the Buffalo Sabres, an NHL franchise, is trying to attract more people to their games. The article mentions that they use a method that is called, “variable price ticket scheme.” This method categorizes 41 of the Sabres’ homes games into 4 different categories, Gold, Silver, Bronze and Value. Any games that are considered Gold would be games that generate the most interest. The example provided from the article, uses a home game against Toronto Maple Leaf. Ticket prices for this particular game would be higher compared to that of Silver, Bronze or Value because a larger amount of people are willing pay more to see this game. In contrast, games that are categorized as Value will have ticket price at an extremely low price but would still generate revenue due to increase in demand. For example, any home games against the Carolina Hurricanes would be considered value games because there is a lack of interest for the games. However with the reduced ticket price, the Sabres’ hope to sellout the games by attracting the poor fans or the non-hockey people to the Value games. If this method does succeed then majority of the Buffalo’s home games would be sold-out.

Chapter 2- Inelasticity, Elasticity, Demand

Chapter two talked about the inelasticity and elasticity for demand and this article give two good examples of them. The hockey market in Buffalo is not as strong as it is in Canada, with the exception of Calgary, their just bandwagoners, and as a result of this they are forced to come up with this marketing strategy to fill more seats in their arena. The demands for Gold games are inelastic because they will sellout regardless of the ticket prices. Even if the local hockey fans are unwilling to pay the increased ticket prices, Leafs fans would gladly drive 3 hours down to Buffalo and watch their Maple Leafs lose. Hockey is almost a necessity to Canadians and although there are substitutes, we as Canadians simply refuse to recognize them. The increased price would result in an increase in total revenue. On the other hand, the Value games are the complete opposite because the demands for them are elastic. When the prices of the tickets are reduced, the demand would immediately increase, resulting in an increase in total revenue. Here is an interesting example of a product being both elastic and inelastic. However I feel that there is a flaw to this method. For example, what kind of message would the Sabres be sending to their fans? “We charge less for admissions to games against Carolina because they suck.” Mr. Gary Bettman wouldn’t like that…

Scarce fresh water an investment boon

http://www.canada.com/edmontonjournal/news/business/story.html?id=60e8a4c1-b733-4f96-a85c-d723c1f4e221&rfp=dta

This article basically talked about how water is becoming scarcer due to human activities. From a finical stand point, this may be a good thing because as water become scarcer, the demand for it would increase as a result it. In fact, investment in water is far more popular than it is in the oil industries. The earlier investors get involved with the water industries, the better it is because of the demand for water in the next few decades would be booming. The United Nations predicts that when we reach the year 2050, about 48 countries would be in shortage of water, affecting a total of 2 billion people. This is a result of developed countries consuming massive amount of water. The articles suggest that $180 billion should be invested into water infrastructure a year in nations such as China and India. That would be doubling the current investment. The problem isn’t really on the supply of water but rather the lack of clean usable water. More than 98 percent of the world’s water supply is salt water and majority of left over 2 percent is locked up in ice caps.

Relations to Chapter 1 -Scarcity

There is no doubt that the scarcity of water is a growing concern world wide because there is such heavy reliance on it. I think in Canada we take for granted the water we have available to us. The supply of water is decreasing around the word and Canada is no exception. Since the government is responsible for the supply of water in Canada, I think they need to do more in order to have a stronger control on their water supply. Enforce strict policies and if they are to be broken, lay out heavy fines. Shortage of supplies of water may be a good thing for the investors investing in that market. However the same can’t be said about other markets. For example, if the price of water was to increase, it would greatly affect agriculture. Price to agricultural products would increase and the people in developing nations would suffer because they wouldn’t have access to it for two reasons. Firstly they simply wouldn’t be able to afford it and secondly, developing countries tend to be run by corrupted Governments that would sell their agricultural goods to foreign countries rather than providing it to their own people. Supply of water is gradually decreasing and there is little that anyone can do about it, at least for now in terms of finding a replacement. The supply of water simply can’t match the demand for water.