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In a recent T-Mobile commercial, one black-hatted outlaw breaks with the rest of his gang. “Aw,” he says, “I can’t do this anymore.” The message is not subtle. Yes, we’ve all been robbing you for years, declares T-Mobile, but at least we’ve decided we’re done with it. There’s more than rhetoric here: T-Mobile recently broke with longstanding industry norms and abandoned termination fees, sneaky overage charges, and other unfriendly practices.

Although T-Mobile’s decision is welcome news for consumers, it doesn’t change the fact that the old extortions remained in place for about fifteen years, and that they remain in place for the vast majority of Americans still trapped in contracts with Verizon, AT&T, and Sprint. And it sheds light on a long-standing problem with how we think about and treat anticompetitive practices in the United States. Our current approach, focussed near-exclusively on monopoly, fails to address the serious problems posed by highly concentrated industries.

If a monopolist did what the wireless carriers did as a group, neither the public nor government would stand for it. For our scrutiny and regulation of monopolists is well established—just ask Microsoft or the old AT&T. But when three or four firms pursue identical practices, we say that the market is “competitive” and everything is fine. To state the obvious, when companies act in parallel, the consumer is in the same position as if he were dealing with just one big firm. There is, in short, a major blind spot in our nation’s oversight of private power, one that affects both consumers and competition.

This blind spot is of particular significance during an age when oligopolies, not monopolies, rule. Consider Barry Lynn’s 2011 book, “Cornered,” which carefully detailed the rising concentration and consolidation of nearly every American industry since the nineteen-eighties. He found that dominance by two or three firms “is not the exception in the United States, but increasingly the rule.” Consumers, easily misled by product labelling, often don’t even notice that products like sunglasses, pet food, or numerous others come from just a few giants. For example, while drugstores seem to offer unlimited choices in toothpaste, just two firms, Procter & Gamble and Colgate-Palmolive, control more than eighty per cent of the market (including seemingly independent brands like Tom’s of Maine).

The press confuses oligopoly and monopoly with some regularity. The Atlanticran a recent infographic titled “The Return of the Monopoly,” describing rising concentration in airlines, grocery sales, music, and other industries. With the exception of Intel in computer chips, none of the industries described, however, was actually a monopoly—all were oligopolies. So while The Atlantic is right about what’s happening, it sounds the wrong alarm. We know how to fight monopolies, but few seem riled at “The Return of the Oligopoly.”

Things were not always thus. Back in the mid-century, the Justice Department went after oligopolistic cartels in the tobacco industry and Hollywood with the same vigor it chased Standard Oil, the quintessential monopoly trust. In the late nineteen-seventies, another high point of enforcement, oligopolies were investigated by the Federal Trade Commission, and during that era Richard Posner, then a professor at Stanford Law School, went as far as to argue that when firms maintain the same prices, even without a smoke-filled-room agreement, they ought to be considered members of a price-fixing conspiracy. (By this logic, the Delta and US Airways shuttles between New York and Washington, D.C., would probably be price-fixers, since their prices do vary by how far in advance you buy, but are always identical.)

Like many things from the nineteen-seventies, the treatment of oligopoly was subject to an enormous backlash in the nineteen-eighties and nineteen-nineties. (Posner actually helped lead the backlash.) And with some justification: some of the cases were quite bad, like a long-forgotten federal war on the breakfast-cereal industry. Firms shouldn’t be penalized for practices that are parallel but not actually harmful, nor for mere “parallel pricing.” An interpretation of law that makes nearly every gas-station owner into a felon is questionable.

But just as the nineteen-seventies went too far, the reaction to the nineteen-seventies has also gone too far. As part of a general retreat from prosecution of all but the most extreme antitrust violations, the United States has nowadays nearly abandoned scrutiny of oligopoly behavior, leaving consumers undefended. That’s a problem, because oligopolies do an awful lot that’s troubling.

Consider “parallel exclusion,” or efforts by an entire industry to keep out would-be newcomers, a pervasive problem. Over the eighties and nineties, despite “deregulation,” the established airlines like American and United managed to keep their upstart competitors out of important business routes by collectively controlling the “slots” at New York, Chicago, and Washington airports. Visa and MasterCard spent the nineties trying to stop American Express from getting into the credit-card industry, by creating parallel policies (“exclusionary rules”) and blacklisting any bank that might dare deal with AmEx. It was only thanks to the happenstance that both put their exclusions in writing that the Justice Department was able to do anything about the problem.

The rise of the American oligopoly makes it an important time to reëxamine how antitrust enforcers and regulators think about concentrated industries. Here’s a simple proposal: when members of a concentrated industry act in parallel, their conduct should be treated like that of a hypothetical monopoly. Of course, that doesn’t make anything necessarily illegal, but abusive or anticompetitive conduct shouldn’t get a free pass just because there are three companies involved instead of one. (I have co-authored a detailed academic paper, with former New York antitrust bureau chief Scott Hemphill, about how this should play out.)

Meanwhile, the idea that an industry is nominally “competitive” should not provide excessive protection from regulatory oversight. Consider, again, the wireless carriers. The Federal Communications Commission is supposed to insure that the carriers, who are leaseholders on public spectrum, use that resource to serve “the public interest, convenience, and necessity.” Unfortunately, the agency, for more than a decade, has let the industry get away with all nature of monkey business, from termination fees through “guess your minutes” pricing plans and subsidization schemes. All this has been allowed under the theory that the industry is “competitive” and therefore not in need of oversight. But, to quote T-Mobile, “[t]his is an industry filled with ridiculously confusing contracts, limits on how much data you can use or when you can upgrade, and monthly bills that make little sense.” The F.C.C. could have done something about this years ago; the fact that it took a member of the industry to call out more than a decade’s abuse of consumers amounts to a serious failure on the part of the F.C.C.

Exploitation of concentrated private power is not a problem that will ever go away. In the United States, it has been a concern since the framing: the original Tea Party was actually a protest against a state-sponsored tea monopoly. The challenge is that power constantly mutates and assumes new forms. That’s why, whether overseeing private or public power, it’s important not to become fixated on form, but to attend to the realities that face consumers and citizens.

Illustration by Marcos Chin.

The article The Oligopoly Problem argued that oligopolies fall through the cracks of these regulations and leave consumers unprotected from harmful business practices where industries are highly concentrated. Read the article and respond to the following

1. What are examples of firms in an oligopolistic market that abuse their power? Explain how they abuse their power and describe the impact on consumers.

2. Do you agree with the author’s feelings about increased government oversight of such industries? Why or why not?

Briefly summarize both the Chinese and African markets. What's happening in China's labor market and colleges and the impact on Africa. Remember: relative prices matter!

Chinese Maker of Ivanka Trump’s Shoes Looks for Cheaper Labor By KEITH BRADSHER (Links to an external site.)Links to an external site., JUNE 1, 2017 DONGGUAN, China — The Chinese factory workers who make shoes for Ivanka Trump (Links to an external site.)Links to an external site. and other designers gather at 7:40 every morning to sing songs. Sometimes, they extol worker solidarity. Usually, they trumpet ties between China and Africa, the theme of their employer’s corporate anthem. That’s no accident. With many workers here complaining about excessive hours and seeking higher pay, the factory owner wants to send their jobs to Ethiopia. The employer, Huajian International, now faces scrutiny from labor activists for how it treats workers. Chinese authorities this week detained an activist (Links to an external site.)Links to an external site. who went undercover in the company’s factory here for a labor rights group. Two other activists who worked at Huajian are missing; it’s unclear whether they were detained. Zhang Huarong, center, Huajian’s founder, singing the company’s song with employees. Credit Gilles Sabrié for The New York Times Ms. Trump’s father campaigned for the United States presidency on a platform of bringing back (Links to an external site.)Links to an external site. overseas manufacturing jobs. But deep (Links to an external site.)Links to an external site.economic (Links to an external site.)Links to an external site. and demographic shifts mean a lot of low-end work — like making shoes — doesn’t offer huge profit in China. As President Trump accuses (Links to an external site.)Links to an external site.China of stealing jobs (Links to an external site.)Links to an external site., those jobs are now leaving for other shores. Huajian, which also makes shoes for a number of American brands, was a major beneficiary of the decades-long shift of manufacturing jobs away from the United States. Global brands flocked to China to tap into the country’s cheap and willing labor pool. Today, Chinese workers are less cheap and less willing. More young people are going to college and want office jobs. The blue-collar work force is aging. Long workdays in a factory no longer appeal to those older workers, even with the promise of overtime pay. In interviews in December and again on Sunday and Monday outside Huajian’s vast industrial complex in this southern Chinese factory city, numerous workers interviewed by The New York Times complained about 14-hour days. While many liked the overtime pay, they said the days were too long, especially since they often included up to three hours of unpaid breaks for lunch and dinner. The workers insisted on anonymity for fear of retaliation by management. Shoes on a conveyor belt in Dongguan. Many Huajian workers have complained about excessive hours and are seeking higher pay. Credit Gilles Sabrié for The New York Times China Labor Watch, the advocacy group investigating the factories, said it found that employees had worked longer weeks than Chinese labor law allows, even excluding breaks. Such violations are common in Chinese factories. A Huajian spokesman, Wei Xuegang, said the company knew nothing about the activists. Asked about the accusation from China Labor Watch, he said Huajian scheduled extra hours during busy times but paid workers according to the law. In a December interview, Zhang Huarong, the company’s founder and chairman, said Huajian followed overtime laws. The Ivanka Trump brand declined to comment on the labor conditions or the activists. In terms of bringing jobs back to the United States, the company said, it was “looking forward to being a part of the conversation.” Such tensions are fueling the drive of Huajian’s founder, Mr. Zhang, to move work to Ethiopia. A former drill sergeant in the Chinese military who sometimes leads his workers on parade-ground drills, Mr. Zhang says work like making shoes will never return to the United States and is increasingly difficult in China as well. “Do Americans really like to work, to do these simple and repetitive tasks?” said Mr. Zhang, in the December interview. “Young Chinese also don’t want to do this after they graduate from college.” In many respects, China’s economy is maturing. The number of people who turn 18 each year and do not enroll in college — the group that might consider factory work — had plummeted to 10.5 million by 2015 from 18.5 million in 2000, government data shows. Because of the effects from China’s former “one child” policy, the figure is on track to fall below seven million by 2020. Costs are rising too, as the government raises minimum wages and benefits in an effort to shift China’s economy away from cheap manufacturing. Wages in Dongguan have increased ninefold since the late 1990s, Mr. Zhang said. Workers said they resented the hours, especially the unpaid breaks. One employee’s printed schedule in December showed that the factory required 60 hours and 10 minutes of paid work per week. Chinese laws require that workweeks average no more than 44 hours and limit overtime to 36 hours per month. On Monday, in the middle of China’s three-day Dragon Boat Festival holiday, throngs of workers filed into the factory. Asked whether he would be eating zongzi, the traditional rice dumpling served during the holiday, one worker replied that they don’t get to celebrate. Another said Huajian gave each worker two small dumplings and an egg for the holiday. One worker, a middle-aged woman with the surname Du, said her children had gone home to central China. Ms. Du wished for time off to celebrate, so she could make rice dumplings for them. Mr. Zhang said that his company kept working hours within legal limits, despite workers who want more overtime pay. “We cannot let them work extra hours just because they have low pay,” Mr. Zhang said in a lengthy interview in December. “We have thought about it, but we want to do business well.” Many workers have said their days were too long, especially since they often include up to three hours of unpaid breaks for lunch and dinner. Credit Gilles Sabrié for The New York Times China Labor Watch said on Tuesday that it had lost contact with three undercover activists (Links to an external site.)Links to an external site. at Huajian factories. The wife of one in the factory in Dongguan said he had been detained by the police. Li Qiang, who started China Labor Watch 17 years ago, said the group’s activists had never before been detained by the police. “I’m very worried about their safety,” he said. “The longer I’ve lost contact with them, the more I worry.” Huajian peaked at 26,000 employees in China in 2006. Staffing is now down to between 7,000 and 8,000 thanks to automation and the shift to Ethiopia, Mr. Zhang said. Huajian produces 100,000 to 200,000 pairs of Ivanka Trump shoes each year, a small fraction of the eight million pairs of shoes it produces annually. The Dongguan factory makes the heels while a second factory completes the shoes. Marc Fisher Footwear, which licenses the Ivanka Trump brand for shoes manufactured by Huijian, has said it was looking into the allegations. Mr. Zhang has had occasional brushes with Chinese labor laws, although no more than many employers in this increasingly litigious society. In 2014, Li Jianguo, a worker, sued Huajian, saying he worked 104 hours of overtime per month and was not paid for it. Huajian acknowledged in that case that the worker had been putting in 52 hours of overtime per month, according to the text of the court verdict, and agreed to pay him for that. Mr. Zhang said that workers currently earn $525 to $580 per month, including overtime pay but not including company-paid benefits like medical insurance and housing subsidies. Workers said that pay ranged from $380 to $580 per month. The money can go a long way in a factory city like Dongguan. Workers said that a 215-square-foot apartment in the neighborhood costs $29 a month to rent. The company provides a monthly housing subsidy of $11.60. A worker at the Huajian factory that produces heels for Ivanka Trump shoes, which are completed at another factory. Credit Gilles Sabrié for The New York Times Citing labor costs and the country’s foreign investment push, Huajian is building a sprawling complex of factories, office buildings and a hotel on the southern outskirts of Ethiopia’s capital, Addis Ababa. Mr. Zhang’s shoe factories there already have 5,000 employees. When finished in four years, the Addis Ababa complex will be ringed by a replica of the Great Wall of China. Some interviewed Huajian workers said they were not concerned about jobs being moved to Ethiopia, given the plentiful number of jobs in China’s southern manufacturing zone. Still, many longtime workers face age discrimination if they leave, as other factories prefer workers under 35. Shoemaking is not strenuous and poses few physical dangers, making it more appealing to older workers. “I really couldn’t get used to these long working hours at the beginning,” one worker said, “but I don’t really have a choice.”

Briefly summarize both the Chinese and African markets. What's happening in China's labor market and colleges and the impact on Africa. Remember: relative prices matter!

Chinese Maker of Ivanka Trump’s Shoes Looks for Cheaper Labor

By KEITH BRADSHER (Links to an external site.)Links to an external site., JUNE 1, 2017

DONGGUAN, China — The Chinese factory workers who make shoes for Ivanka Trump and other designers gather at 7:40 every morning to sing songs. Sometimes, they extol worker solidarity. Usually, they trumpet ties between China and Africa, the theme of their employer’s corporate anthem. That’s no accident. With many workers here complaining about excessive hours and seeking higher pay, the factory owner wants to send their jobs to Ethiopia. The employer, Huajian International, now faces scrutiny from labor activists for how it treats workers. Chinese authorities this week detained an activist who went undercover in the company’s factory here for a labor rights group. Two other activists who worked at Huajian are missing; it’s unclear whether they were detained. Zhang Huarong, center, Huajian’s founder, singing the company’s song with employees. Credit Gilles Sabrié for The New York Times Ms. Trump’s father campaigned for the United States presidency on a platform of bringing back overseas manufacturing jobs. But deep and demographic shifts mean a lot of low-end work — like making shoes — doesn’t offer huge profit in China. As President Trump accuses China of stealing jobs those jobs are now leaving for other shores. Huajian, which also makes shoes for a number of American brands, was a major beneficiary of the decades-long shift of manufacturing jobs away from the United States. Global brands flocked to China to tap into the country’s cheap and willing labor pool. Today, Chinese workers are less cheap and less willing. More young people are going to college and want office jobs. The blue-collar work force is aging. Long workdays in a factory no longer appeal to those older workers, even with the promise of overtime pay. In interviews in December and again on Sunday and Monday outside Huajian’s vast industrial complex in this southern Chinese factory city, numerous workers interviewed by The New York Times complained about 14-hour days. While many liked the overtime pay, they said the days were too long, especially since they often included up to three hours of unpaid breaks for lunch and dinner. The workers insisted on anonymity for fear of retaliation by management. Shoes on a conveyor belt in Dongguan. Many Huajian workers have complained about excessive hours and are seeking higher pay. Credit Gilles Sabrié for The New York Times China Labor Watch, the advocacy group investigating the factories, said it found that employees had worked longer weeks than Chinese labor law allows, even excluding breaks. Such violations are common in Chinese factories. A Huajian spokesman, Wei Xuegang, said the company knew nothing about the activists. Asked about the accusation from China Labor Watch, he said Huajian scheduled extra hours during busy times but paid workers according to the law. In a December interview, Zhang Huarong, the company’s founder and chairman, said Huajian followed overtime laws. The Ivanka Trump brand declined to comment on the labor conditions or the activists. In terms of bringing jobs back to the United States, the company said, it was “looking forward to being a part of the conversation.” Such tensions are fueling the drive of Huajian’s founder, Mr. Zhang, to move work to Ethiopia. A former drill sergeant in the Chinese military who sometimes leads his workers on parade-ground drills, Mr. Zhang says work like making shoes will never return to the United States and is increasingly difficult in China as well. “Do Americans really like to work, to do these simple and repetitive tasks?” said Mr. Zhang, in the December interview. “Young Chinese also don’t want to do this after they graduate from college.” In many respects, China’s economy is maturing. The number of people who turn 18 each year and do not enroll in college — the group that might consider factory work — had plummeted to 10.5 million by 2015 from 18.5 million in 2000, government data shows. Because of the effects from China’s former “one child” policy, the figure is on track to fall below seven million by 2020. Costs are rising too, as the government raises minimum wages and benefits in an effort to shift China’s economy away from cheap manufacturing. Wages in Dongguan have increased ninefold since the late 1990s, Mr. Zhang said. Workers said they resented the hours, especially the unpaid breaks. One employee’s printed schedule in December showed that the factory required 60 hours and 10 minutes of paid work per week. Chinese laws require that workweeks average no more than 44 hours and limit overtime to 36 hours per month. On Monday, in the middle of China’s three-day Dragon Boat Festival holiday, throngs of workers filed into the factory. Asked whether he would be eating zongzi, the traditional rice dumpling served during the holiday, one worker replied that they don’t get to celebrate. Another said Huajian gave each worker two small dumplings and an egg for the holiday. One worker, a middle-aged woman with the surname Du, said her children had gone home to central China. Ms. Du wished for time off to celebrate, so she could make rice dumplings for them. Mr. Zhang said that his company kept working hours within legal limits, despite workers who want more overtime pay. “We cannot let them work extra hours just because they have low pay,” Mr. Zhang said in a lengthy interview in December. “We have thought about it, but we want to do business well.” Many workers have said their days were too long, especially since they often include up to three hours of unpaid breaks for lunch and dinner. Credit Gilles Sabrié for The New York Times China Labor Watch said on Tuesday that it had lost contact with three undercover activists at Huajian factories. The wife of one in the factory in Dongguan said he had been detained by the police. Li Qiang, who started China Labor Watch 17 years ago, said the group’s activists had never before been detained by the police. “I’m very worried about their safety,” he said. “The longer I’ve lost contact with them, the more I worry.” Huajian peaked at 26,000 employees in China in 2006. Staffing is now down to between 7,000 and 8,000 thanks to automation and the shift to Ethiopia, Mr. Zhang said. Huajian produces 100,000 to 200,000 pairs of Ivanka Trump shoes each year, a small fraction of the eight million pairs of shoes it produces annually. The Dongguan factory makes the heels while a second factory completes the shoes. Marc Fisher Footwear, which licenses the Ivanka Trump brand for shoes manufactured by Huijian, has said it was looking into the allegations. Mr. Zhang has had occasional brushes with Chinese labor laws, although no more than many employers in this increasingly litigious society. In 2014, Li Jianguo, a worker, sued Huajian, saying he worked 104 hours of overtime per month and was not paid for it. Huajian acknowledged in that case that the worker had been putting in 52 hours of overtime per month, according to the text of the court verdict, and agreed to pay him for that. Mr. Zhang said that workers currently earn $525 to $580 per month, including overtime pay but not including company-paid benefits like medical insurance and housing subsidies. Workers said that pay ranged from $380 to $580 per month. The money can go a long way in a factory city like Dongguan. Workers said that a 215-square-foot apartment in the neighborhood costs $29 a month to rent. The company provides a monthly housing subsidy of $11.60. A worker at the Huajian factory that produces heels for Ivanka Trump shoes, which are completed at another factory. Credit Gilles Sabrié for The New York Times Citing labor costs and the country’s foreign investment push, Huajian is building a sprawling complex of factories, office buildings and a hotel on the southern outskirts of Ethiopia’s capital, Addis Ababa. Mr. Zhang’s shoe factories there already have 5,000 employees. When finished in four years, the Addis Ababa complex will be ringed by a replica of the Great Wall of China. Some interviewed Huajian workers said they were not concerned about jobs being moved to Ethiopia, given the plentiful number of jobs in China’s southern manufacturing zone. Still, many longtime workers face age discrimination if they leave, as other factories prefer workers under 35. Shoemaking is not strenuous and poses few physical dangers, making it more appealing to older workers. “I really couldn’t get used to these long working hours at the beginning,” one worker said, “but I don’t really have a choice.

Entrepreneurs have been a driving force in the beverage industry for more than a century. In 1886, John Pem- berton began marketing Coca-Cola as an over-the- counter medicine, and in 1929 Charles Grigg developed Bib-Label Lithiated Lemon-Lime Soda, today known as 7UP. The beverage industry has always provided oppor- tunities for entrepreneurs, but in the current market, the cost of purchasing new ingredients and technologies and the intense competition make the odds of a successful new product introduction less likely than in the past.1
New beverages are developed every year. In some years, more than 3,000 new beverage products are brought to the market, but many do not succeed. Entre- preneurs who attempt to succeed in this industry must be aware of the changing consumer tastes and industry trends.

Caffeinated Products: Coffee, Soft Drinks, and Water

Specialty coffee outlets in the United States experienced explosive growth during the 1990s, growing from only 200 in 1989 to approximately 10,000 by 2000.3
The most well-known name in the gourmet coffee in- dustry is Starbucks, but few people realize the company began in 1971. The company was started by three en- trepreneurs in Seattle’s Pike Place Market. The focus was on coffee and equipment, including filters, grinders, and pots—no scones, no cappuccinos. By 1987, there were only six Starbucks outlets, but another entrepreneur, Howard Schultz, saw the potential of Starbucks after traveling to Italy and seeing the many coffee bars there. Schultz raised $3.8 million and bought the company. The company went public in 1992 at $17 per share and within five months the stock price had doubled.4 By 2001, Starbucks had expanded to 3,500 stores in North America and 800 stores overseas.5 By 2004, it had 7,569 stores worldwide.6 Starbucks is also equipping its stores for high-speed wireless Internet access, so customers can surf the Net on their laptops or Palm Pilot. The longer people linger at the stores, the more likely they are to order another latte.7
Many entrepreneurs are not willing to let Starbucks own the coffee market, though. Caribou Coffee Com- pany was started by entrepreneurs after they had climbed mountains in Alaska in 1990 and saw a herd of  caribou in the valley below. By 2004, the company was the nation’s second largest specialty coffee company, em- ploying more than 3,000 people. The Caribou Coffee outlets look like Alaskan lodges with fireplaces and wooden cabinetry.8
A recent trend toward caffeinated soft drinks began with Jolt. Jolt was introduced in 1985 by C. J. Rapp, president of Global Beverages. Jolt became a moderate success and a fixture in the marketplace at a time when most other companies were taking caffeine out of their products. Although similar products entered the mar- ket after Jolt, there were few other successes.9 How- ever, by the late 1990s, caffeinated soft drinks were common and other companies were introducing simi- lar products.10
By the mid-1990s, an entrepreneur had developed another successful idea. A college student, David March- eschi, who used to pull all-nighters cramming for tests, developed the idea for caffeinated water. Although other students drank coffee or soda to stay awake, Marcheschi did not like the taste of either. He wondered why some- one couldn’t caffeinate plain water. A few years later, he mentioned his idea to a friend whose father owned a beverage company and within a few weeks, the formula  beverage company and within a few weeks, the formula for Water Joe was developed. In 1995, Marcheschi formed a partnership with Nicolet Forest Bottling and the product was launched.11 A small article appeared in a local paper, and then the Milwaukee Sentinel ran a front-page story that was picked up by the Associated Press. Articles about Water Joe spread rapidly across the United States.12 By the end of 1996, Water Joe was ship- ping 400,000 bottles each week and annual sales were about $12 million.13 By the year 2000, Water Joe had be- come a subsidiary of Artesian Investments, a 16-year-old company in Green Bay, Wisconsin. The national account manager for Artesian Investments states, “What we’re giving people is a healthier alternative.”14 As of 2003, Water Joe had expanded into Germany and was being introduced in the United Kingdom.15
Other creative entrepreneurs decided to sell similar products over the Internet. The founders of Thinkgeek. Com sell a “Case O’ Buzz Water.” Each bottle of water has the same amount of caffeine as two extra large cups of coffee.16
Herbal Drinks and Green Teas

Herbal drinks first become popular in 1970 when Mor- ris J. Siegel founded Celestial Seasonings, Inc., which markets herbal teas.17 Siegel has been described as a hip- pie with a penchant for herbs, and this persona has had a positive effect on the company. The culture of non- conformity led to a great deal of creativity, and by the mid-1990s, Celestial Seasonings was the leading spe- cialty tea maker in the United States.18 By 1998, Celes- tial Seasonings had jumped into the fastest growing segment in the tea industry—the green tea category. The market for green tea increased 53 percent in 1997 and showed no signs of slowing. Much of the growth in sales was attributed to research reports indicating that green tea may lower the risk of certain types of cancer and bal- ance cholesterol.19 By the end of the decade, Celestial Seasonings had teamed up with the company that intro- duced Arizona Iced Tea and launched a line of ready-to- drink teas in a smart retro bottle that looks like the melding of a glass bottle and a tin can.20
In 2000, Celestial Seasonings merged with the Hain Food Group. As of 2004, Celestial Seasonings was sell- ing 1.2 billion cups of tea per year. Morris (Mo) Siegel retired to climb the last section of the Colorado moun- tains he had not yet climbed.21
John Bello, cofounder of SoBe Beverage Co., says his company is “taking the concept of herbal remedies to the mass market.” SoBe’s products include a variety of teas containing plant extracts that improve alertness. One of the company’s “energy tonics” allows drinkers “to perform all day and all night.” Other teas include echi- nacea, selenium, or bee pollen for additional therapeutic purposes.22 A new marketing approach was imple- mented for some of its products in 2000. Six of its products—Energy, Lizard Fuel, Lizard Lightning, Elixir, Green Tea, and Lemon Tea—were marketed in paper cans. Each octagonal paper can was adorned with the radical SoBe lizard. The colorful labels come in pink, or- ange, tan and bright yellow.23 As of 2004, SoBe bever- ages were available internationally. The company was selling its product in Canada, Mexico, the Bahamas, the United Kingdom, Barbados, and Guam.24
Richard Keer, president of The Natural Group, an im- porter of all-natural nonalcoholic beverages, has re- cently begun to market a product called Ame, a drink made with fruit juices, eastern herbs, and spring water. It is available in red, white, and rose and is packaged in 250-ml and 750-ml bottles. The company also sells Nor- folk Punch, a nonalcoholic beverage based on an ancient monastic recipe of 35 different herbal extracts like fennel, rosemary, and peppermint.25

Juice Bars and Smoothies
Proponents of smoothies contend that the beverage is one of the most promising new beverage items since spe- cialty coffees. The term smoothie is a generic term for a blender-made concoction typically made from fresh fruit, fruit juices, ice, and sherbet or yogurt. Optional add-ons include calcium, protein powder, bee pollen, or the herb gingko biloba. Smoothies are often sold at juice bars and are marketed as a lowfat, high-nutrition meal in a cup.26
One company, Smoothie King, has been in existence for 24 years, since long before the great demand for the product developed. Richard Leveille, vice president of franchise development, calls Smoothie King’s products the first and best available. Its product is not yogurt- or sherbert-based, but primarily fruit-based. Smoothie King makes daily deliveries to the Dallas Cowboys camp, and during spring training it delivers 200 to 300 smoothies a day to the New York Yankees in Tampa.27 By 2004, Smoothie King had 340 units in 34 states and also had three international units.28
Another company, Jamba Juice Co., was establishing itself as a leader in the juice bar segment. Founder, Kirk Perron, established his first juice bar when he was 26 years old. Perron states that his company did not “invent smoothies or squeeze-to-order juices,” but his company was the first to “unlock the code and create a sensory ex- perience in those products.” Jamba Juice sells its prod- ucts in an atmosphere of hot pinks, purples, greens, oranges, and natural woods.29 By December 2004, the company had 430 units, with locations in airports and  oranges, and natural woods.29 By December 2004, the company had 430 units, with locations in airports and on college campuses.30

Duiscussion Questions

Using demographic segmentation, segment the market for

a. Water Joe

b. Celestial Seasonings tea

c. Smoothies

d. the green tea industry

Using benefit segmentation, segment the market for

a. Water Joe

b. Koppla

c. Smoothies

d. the green tea industry

The rapid growth of Water Joe fueled the creation    of the caffeinated water industry in 1996. How long do you expect the rapid growth of this industry to continue?

Identify potential market segments for Ame and the energy tonic, the products of SoBe Beverage Co.

What impact do entrepreneurs have on the beverage industry?

What national trend would be beneficial for Celestial Seasonings but detrimental for Water Joe?

A gerontological nurse is caring for an 85-year-old female patient who is a victim of elder abuse. During the initial history and physical examination, the patient shared that she had recently moved in with her adult alcoholic son, his wife, and their three children. Over the past few months, however, she had been noticing many of her personal items missing, including her wedding ring, a set of crystal figurines, and her bank statements and checkbook. She also shared that her son told her not to worry about anything because he will be taking good care of her. When the patient’s son arrived during the interview, the gerontological nurse noticed that the patient became anxious and refused to answer any more questions.

1. What type of elder abuse is identified in this situation? Explain.

2. Elder mistreatment is an umbrella term that covers abuse, neglect, exploitation, and abandonment. A. True B. False

3. In most states and U.S. jurisdictions, licensed nurses are required to report suspicions of abuse to the state. Identify resources the gerontological nurse can use to report suspicions of elder abuse.

4. Caregivers are considered to be “the hidden patient” with many experiencing stress and caregiver burden. What tips can the gerontological nurse provide to family members in the caregiving role to reduce caregiver stress?

5. Family members and other unpaid caregivers provide the majority of care for older adults in the United States. A. True B. False

An 87-year-old white woman is diagnosed with end-stage liver disease and is requesting to be discharged to her home to die. The gerontological nurse consults with the health care provider to arrange a referral for hospice care.

1. The gerontological nurse’s decision is based on the knowledge that hospice care is indicated when

A. preparation for death with palliative care and comfort are the goals of care.

B. clients and families are having difficulty coping with grief reactions.

C. clients have unmanageable pain and suffering as a result of a physical condition.

D. family members can no longer care for dying loved ones at home.

2. Identify and describe the types of grief that the older adult may experience.

3. Explain the Patient Self-Determination Act (PSDA).

In his study on the labor hours spent by the FDIC (Federal deposit insurance Corporation) on 91 bank examinations, R.J. Miller estimated the following function.
lnY=2.41+0.3674lnX1+0.2217lnx2+0.0803lnx3-0.1755D1+0.2799D2+0.5634D3-0.2572D4
     (0.55)     (0.0477)       (0.0628)      (0.0287)      (0.2905)    (0.1044)     (0.1657)     (0.0787)
R2=0.766
Where Y= FDIC examiner labor hours
            X1= Total assets of bank, x2 total number of offices in bank, x3 ratio of classified loans to total loan for bank . D1=1 if management rating was good D2=1 if management rating was fair D3=1 if management rating was satisfactory D4=1 if examination was conducted jointly with the state.
a) Interpret the results
b) Interpret the dummy variables
c) Which of the parameters from the estimated regression are statistically significant at 5% significance level?  

Question 3

Using the data in SLEEP75.RAW, we obtain the estimated equation

Sleep =3,840.83 -.163totwrk - 11.71educ - 8.70 age -.128 age2 + 87.75 male            

              (235.11)    (.018)              (5.86)        (11.21)          (.134)       (34.33)                     

N=706, R2=.123,

The variable sleep is total minutes per week spent sleeping at night, totwrk is total weekly minutes spent working, educ and age are measured in years, and male is a gender dummy.

1. All other factors being equal, is there evidence that men sleep more than women? How strong is

The evidence?

2. Is there a statistically significant tradeoff between working and sleeping? What is the estimated

Tradeoff?

3. What other regression do you need to run to test the null hypothesis that, holding other factors

Fixed, age has no effect on sleeping?

Question 4

From the data for 46 states in the United States for 1992, Baltagi obtained the following regression results:

                                              LogC= 4.3- 1.34 log P +0.17 log Y

                                                    Se=(0.91) (0.32)       (0.20)                                    R²=0.27

Where C= cigarette consumption, Packs per year

              P= real price per pack

              Y= real disposable income per capita

1. What is the elasticity of demand for cigarettes with respect to price? Is it statistically significant?
2. What is the income elasticity of demand for cigarettes? Is it statistically significant?
3. What is the overall significance of the regression? Which test do you use?

1. Explain how and why each of the following factors would influence current aggregate demand in the United States:

(a) an increased fear of recession

(b) an increased fear of inflation

(c) the rapid growth of real income in Canada and Western Europe

(d) a reduction in the real interest rate

(e) a decline in housing prices

(f) a higher price level (be careful)

2. Which of the following would be most likely to shift the
long-run aggregate supply curve (LRAS) to the left?

a. unfavorable weather conditions that reduced the size of this year’s grain harvest

b. an increase in labor productivity as the result of improved computer technology and expansion in the Internet

c. an increase in the cost of security as the result of terrorist activities

3. How would an increase in the economy’s production possibilities influence the LRAS?

4. Suppose consumers and investors suddenly become more pessimistic about the future and therefore decide to reduce their consumption and investment spending. How will a market economy adjust to this increase in pessimism?

5. “If the general level of prices is higher than business
decision makers anticipated when they entered into
long-term contracts for raw materials and other
resources, profit margins will be abnormally low and
the economy will fall into a recession.”
– Is this statement true?

6. Which of the following would be most likely to throw the
U.S. economy into a recession?

(a) a reduction in transaction costs as the result of the growth and development of the Internet

(b) an unanticipated reduction in the world price of oil (will the impact of this factor differ between oil producing and oil consuming states?)

(c) an unanticipated reduction in AD as the result of a sharp decline in consumer confidence

7. During the first half of 2008, the world price of oil soared while stock and housing prices plunged. Within the framework of the AD-AS model, how would these two changes influence the U.S. economy? Explain the expected impact on output & price level.

8. When actual output is less than the economy’s full employment level of output, how will real resource prices and real interest rates adjust?

9. Construct the AD, SRAS, & LRAS curves for an economy experiencing:

(a) full employment equilibrium

(b) an economic boom

(c) a recession

True or False:

Terrorism, or acts of violence by non-state actors, is distinguished from criminal acts on the basis of the purpose for which violence is carried out. In the case of terrorism, the purpose is making political changes.

According to a cultural explanation of terrorism, in an attempt to preserve their threatened identity and values, groups actively distinguish themselves from despised “others.” At the local level, the cultural friction may translate into conflicts divided along religious or ethnic lines that aim to safeguard identity.

Globalization has been an effective deterrent against terrorism. The processes of globalization prevent terrorist organizations from acquiring, manufacturing, and using weapons of mass destruction.

Liberal perspectives in the international political economy (IPE) contends that the global political economy is being shaped by competition among states, who seek to maximize their power and security.

Maintenance of fiscal discipline, trade liberalization, deregulation of the economy, etc. are examples of the set of policy prescriptions of the Washington Consensus promoted by the United States in developing countries.

The General Agreement on Tariffs and Trade (GATT) was transformed into the International Monetary Fund (IMF) in 1995. The IMF is responsible for managing international trade.

The most favored nation principle has been a bedrock of international trade negotiations. The principle holds that any preferential trading agreement reached with one country should be extended to other countries.

The theory of comparative advantage argues that all countries stand to benefit by specializing in the production of goods to which they are relatively most suited and then trading their surplus production with one another.

In an attrition strategy (of terrorism), Terrorists try to convince the population that the terrorists are strong enough to punish disobedience and that the government is too weak to stop them, so that people behave as the terrorists wish.

Groups engaged in outbidding (a strategy of terrorism) use violence to convince the public that the terrorists have greater resolve to fight the enemy than rival groups, and therefore are worthy of support.

A spoiler strategy of terrorism is an attempt to induce the enemy to respond to terrorism with indiscriminate violence, which radicalizes the population and moves them to support the terrorists.

Terrorists sometimes resort to hostage taking, airline hijacking, and explosions announced in advance are generally intended to use the possibility of harm to bring issues to the attention of the target audience. These actions are referred to as demonstrative terrorism.