Thursday, January 05, 2006

Xbox Shortage

For those of you who use 90% of your life to play Xbox, here is an economic question about the recent debut of the Xbox 360:

Why was/is there a shortage of Xbox 360's at many stores?

There is always a shortage of the most popular Christmas gift every year, and this year is no exception. The real question though is:

If Microsoft and retailers that sell the Xbox know that demand is going to very high for the Xbox 360 (which I assume they did), instead of running out of the game consoles, why don't they just raise the price to get rid of the shortage? They would then sell the same amount for a higher price and earn more revenues.

Any thoughts? I will post some articles that discuss this problem, but I want to see what you guys think on your own first.

Regulating Clothes Sizes

Marginal Revolution reports on a new law that has just taken effect in Buenos Aires:

Women in search of fashionable clothes the world over have a similar problem: What do you do if you are not a size 6?

Some government leaders in Argentina have an answer. They have passed a controversial law designed to break what they see as the tyranny of tiny sizes. Starting Dec.21, Buenos Aires province, which includes the capital's glitzy suburbs but not the fashion-forward city itself, will require shops catering to adolescent girls to stock clothing in a minimum range of sizes roughly equivalent to sizes 6 to 16 in the U.S.

Provincial inspectors will scrutinize merchants' clothing racks, "tape measure in hand," says Ana Serrano, the province's director of commerce and designated sizing sheriff. Shops that don't have the prescribed sizes in stock will face fines of up to $170,000. Officials maintain that the small clothes put pressure on young women to take up extreme dieting. That in turn contributes to one of the highest rates of anorexia and bulimia in the world, they say.

In a nation where stylishness is a national religion, the sizes law is triggering a fevered debate...Argentina women who aren't extremely thin have an unusually tough time finding fashionable clothes.

What do you guys think of this law from an economic perspective? Is there a market failure here that the government needs to regulate? Do you think the clothing stores are just providing what the consumers demand and there is no need to intervene?