Hospital care is the largest category of medical expenditure. It accounts for 41% of the cost of health insurance—more than doctor visits and prescription drugs put together.Policy makers confront two problems when trying to reduce medical expenditures by setting "Global Budgets" or revenue caps:
The Obama administration .. required Maryland to limit total revenue at each hospital—in ... in return for ...receiving higher Medicare and Medicaid reimbursements...
...the 2014 reform substantially eliminated the incentive for Maryland hospitals to attract and treat additional patients. From 2008 to 2023, the state went from treating 7% more hospital-admitted patients per capita [moral hazard] than nationwide levels to 18% fewer. The relative volume of outpatient care has also fallen.
...Community hospitals have increasingly dumped costly patients [adverse selection] on the state’s academic medical centers, which haven’t been fully compensated for the additional load and which typically are short of beds. ... Between 2012 and 2023, kidney-transplant rates statewide declined from 161% to 60% of the national average. Between 2014 and 2023, emergency department wait times in Maryland rose from 137% to 153% of nationwide levels—much longer than in any other state.Increasing wait times is a higher ''price'' paid by patients, so it rations care to those willing to wait. But this higher price does not benefit the hospitals, so it doesn't give them an incentive to increase capacity.
WSJ:
Massive data-center spending has been fueling economic growth all year. Goldman Sachs recently projected that artificial-intelligence investment in the U.S. will hit a staggering 1.9% of GDP. While much of that money is spent on imported chips, the boom is also creating plenty of construction jobs in the U.S. as developers race to build server farms. The rise in construction spending has helped compensate for a decline in home-building.
Spending on imported goods surged by more than a quarter on an annualized basis, driven in part by semiconductor purchases from abroad. Overall net imports subtracted 3.3 percentage points from GDP growth.
GDP reflects the total of all spending. But since some of that spending is on imported products, rather than things made in the U.S., imports are considered a drag on GDP.
Competition On the Merits examines the incentives of state antitrust enforcers.
PROBLEM: The states bring cases against mergers whose effects fall mostly outside their borders, and ask settlement terms that have little to do with competition.
What do the states get by challenging National mergers? Attorney fees, local jobs, donations to local firms, and DEI commitments. And don't forget free PR. Many state AG's are governors-in-waiting.
SOLUTION: What can be done to realign incentives?
Eleven years old but still relevant for the trick-or-treaters this week.
Soaring cocoa costs prompted MondelÄ“z, the maker of Cadbury and Milka chocolate, to raise European chocolate prices by roughly 30%. Management anticipated a decline in sales. But consumers proved more price-sensitive than expected. Historically, the company had observed demand elasticities of approximately −0.4 to −0.5. Following the increases, elasticity rose in magnitude to roughly −0.7 to −0.8. On its October 2025 earnings call, CEO Dirk Van de Put noted that some chocolate bars had crossed important price thresholds, prompting consumers to reconsider their purchases. Competitors' decisions not to fully match MondelÄ“z's price increases also contributed to the disappointing sales response.
Marshall's Second Law of Demand says that demand tends to become more elastic as price rises. At a higher prices, more products are viable alternatives. Consumers may barely notice a price increase when chocolate is relatively inexpensive. But as prices climb, more consumers begin substituting. They may choose cheaper brands, purchase smaller packages, or forego chocolate altogether. Managers should be cautious about extrapolating historical elasticity estimates. The response to a 30% price increase is likely "out-of-sample" from the historical context.
The calculation is complicated by competitors' responses. Campbell's assumes that competing brands will not immediately match its price increases, making its products relatively more expensive. If competitors also raise prices, Campbell's could lose fewer customers than its forecast predicts. Cunfer acknowledged that the company is using different elasticity estimates across its product lines and has deliberately chosen conservative assumptions. That is, Campbells appears to be making relatively sophisticated use of elasticity concepts.
Will this have longer-term repercussions for SpaceX? When my coauthors failed to meet deadlines, I could recover from this disappointment, but I learned I could not trust them in the future. Right now, SpaceX is the only viable satellite based communications option. But there are five others either being deployed, or planning to be deployed, by 2030. Unless there are substantial switching costs, potential customers should consider these alternatives to be more trustworthy. Investors apparently recognized the value of reducing dependence on Starlink: following reports of the restrictions, shares of its European competitor Eutelsat jumped 23% in a single day.
