Welcome. Ah, thank you. Hi everyone. Welcome to our last blue bag lunch talk of the semester. My name is Christy bear and I'm the assistant executive director of the center on finance law and policy at the University of Michigan. I am thrilled that you are joining us for this. The end of the semester is always hard. And so we are truly grateful that you are taking time to spend with us. The purpose of these blue bag lunch talks is to foster interdisciplinary collaborations across schools. The University of is the University of Michigan is unique in that it's not just one really good school, which that cup with a so so bench. The University of Michigan is a collection of top ranked schools across the 19 schools and colleges, and one of the beautiful things about being here is that every sidewalk leads to top program with people who are committed to doing research in pursuit of the public good. So we open these talks to everyone in the hopes that it helps you find new collaborators that it helps the faculty to present their ideas, have them stress test by people who are also brilliant but trying to think a little bit differently. So, the way that this is going to work is that Professor Schaefer is going to talk for a little bit, and we are asking you to keep yourself muted while he is talking and then, as you have questions you can either send them in the chat by just posting a question and then at the end I'll give you a chance to unmute and ask the question yourself, or if you want me to ask your question for you, totally happy to do it, just say, ask for me, and I won't identify you. So, without further delay. I want to thank Liz Smith and Tracy Van Dusen, who will be behind this the whole time, making sure that the tech works. And now let me tell you a little bit about Luke Schaefer. Luke Schaefer is the Herman and Amalie Kohn Professor of Social Justice and Social Policy. He's also the Associate Dean for Research and Policy Engagement at the Ford School of Public Policy. At U of M, he is a professor of social work, and he's the inaugural director of poverty solutions. If you're not familiar with poverty solutions is an interdisciplinary initiative. It's a research center that's focused on finding new ways to prevent and alleviate poverty. So, through that role, Associate Dean Schaefer acts as a special counselor on anti poverty policy to the director of the Michigan Department of Health and Human Services. He's published a bunch of stuff, poverty solutions tries all kinds of experimental and interesting things to see what works and what doesn't. And if you have not read his award winning book $2 a day, living on almost nothing in America. Then I would highly recommend that you put that on your winter reading list, because it is fascinating. And it reads almost like a novel. So, two thumbs up for that one. His topic today is journey to a fully refundable child tax credit in the United States, a child allowance to some tax relief for middle class families to others, and anti poverty poverty policy by another name to me. We've posted a related paper and a Wall Street Journal article to give you a little bit of context but if you didn't read him in advance. Don't worry about it because he is going to tell you all about it. And if there is anyone who can make tax policy, come to life and be actually interesting. I think we've found the right guy. So, Associate Dean Schaefer thanks for joining us today. Christy thanks I appreciate it. That's the nicest thing anyone's ever said about me so I will try to make tax policy. Interesting and this is a, I mean, I find it very interesting in that it is tax policy, but maybe it's not maybe it's social welfare policy, maybe it's family policy so let's see where we get by the end of the day and maybe it doesn't matter what each of us think about it or not. So poverty solutions is the initiative I run we are a university wide initiative but we sit at the Ford School we get to, you know, when we're in in residence we share an actual capacity and the Center for Finance, Law and Policy. So now we'll just sort of theme that we're sharing a virtual hallway and she described what we try to do we try to partner with communities and policymakers to find new ways to prevent and alleviate poverty, looking at a range of things we're very active in the city of Detroit we have a partnership on economic mobility. Mayor Duggan and his team and we work on all sorts of things like digital inclusion the digital inclusion director for the city of Detroit actually works for me at poverty solutions but spends his time at the city and heads up those initiatives for the city. He just did a commercial on digital inclusion with Aquaman the actor in the blockbuster video so And within a day it had like 900,000 views so now I'm only doing videos with mega super, you know, superstars. And we do a lot with the state of Michigan to. So I serve as a special counselor to MDHS, we have a team that works with the department on public assistance programs. And of course many other faculty at the University of Michigan that do a lot on health policy so we were very active. During have been very active during the covert crisis in terms of trying to make our public assistance programs work as good as possible during this time. So today I'm talking about sort of a solution that I've been thinking about for a really long time. I guess relatively speaking, and it really does come out of my book $2 a day so I came into my career as a scholar, really focusing on large scale data I'd actually done a fair amount of social work in terms of case management. Before that, but really got interested in sort of the structural reasons for poverty, and came to University of Michigan I was studying programs like unemployment insurance that's a program that historically low wage workers have a lot of difficulty accessing and actually one of the, the most novel things that we've ever done in social policy was in the cares act when we really expanded unemployment insurance to a huge amount of the workforce that isn't covered by that program that are non traditional jobs that are working on 1099 whether legally they should or not. And a lot of the reason why people get sort of moved to those is to avoid benefit costs including employer taxes on unemployment insurance. But historically, for example black workers they're less likely they're both less likely to apply for unemployment insurance, and they're less likely to get it if they do apply. But the folks that don't apply actually often are uncertain as to sort of what the actual rules are that would keep them from accessing it but just know that it's not, you know terribly accessible. So a program like snap that supplemental nutrition assistance program what a lot of people call, you know historically it's called food stamps. And that's sort of an in kind benefit right and so scholars really debate about whether or not it's money, or is it food assistance. And you can see that when people have other money coming in that if you give a benefit like food assistance that people can take some of the money they were spending on food and apply it to other stuff it kind of works like cash but in my work on $2 a day I really sort of moved out of my sort of shell the safety of being a data nerd and spending most of my career, looking at large scale data. I love data, you know, a great chart or a spreadsheet just makes me feel really warm inside and I cuddle it up at night but my, my wife is adamant no data in the bed. And so in this project though, I sort of did more of a mixed methods we sort of did this different technology of actually saying, you know if I have questions about extreme poverty in the United States. Maybe I should go out and talk to people. So I paired up with Kathy Eden, who is now at Princeton. She was at Harvard when we started and then she was at Hopkins and now she's at Princeton. And we tried to marry both things and what we're really interested in was families who often had access to good assistance through snap. Some maybe had a housing subsidy but families who had no access to cash that had no access to money and you can see in virtually every data set available household survey data sets. So we've seen the trend and at least four different major household survey data sets. You can see it in administrative records of people on snap we're reporting they don't have any money. You see this big spike in the number of families that are going a month, a calendar quarter or an entire year with extremely low cash incomes and so really one of the major questions in the book was, what is that experience like what is it like in 21st century America to not have any money and do the in kind benefits that we do offer that are more widely available do they make up for that or not. In doing the work of getting to know families and Chicago and Cleveland and Appalachia and then down to the Mississippi Delta. One of the really striking things that we found very early on that I think is a partial answer to that very question is how much time people actually spent. Trying to generate a little bit of cash right even if they had these in kind benefits. How much time was spent trying to get that enough money to buy toilet paper or toothbrushes or new clothes for the kids at the second hand store and really the very innovative ways that they would go about doing that. And it was really I think elucidated to me, the degree to which all the work I'd been done doing before which I, you know I still think I did really good work. Before I was a mixed method work, I mean, maybe it wasn't really good work but it was it was fine it was pretty good, right. I was proud of it, how's that. Other people can determine whether or not it's any good but I guess what I, you know, really came to appreciate is how much like my positionality as a researcher, you know, often doing my work looking at a data set in my office either at State and Hill or in the ICU, and, you know, getting frustrated and going down getting a copy like how much I often didn't even know the right questions to ask. And things that I missed so one example of that is the important role of blood plasma right so when we think about Americans who don't have enough money they don't have enough money in a week or they don't have enough money in a month. And the one coping mechanism for that we found in three of our four field sites that selling blood plasma was ubiquitous right so it turns out, if you go to most places Christie and I were talking about this before if you go to most places very poor, usually urban zip codes or census tracts. That's usually where you'll find a plasma center and they're usually off of a bus line they're often like located actually right next to the public benefits office. And people will come in and in the case of Jessica Compton she her husband actually had been working in a fast food restaurant and he'd sort of seen this thing that's pretty common where he still had a job but his hours have been cut to zero after holidays. You see a lot of variation in hours it creates a lot of instability, and you know scholars are really starting to think that instability actually might be worse right or at least its own issue on top of the experience of low income general. So there was no money for a number of months coming into their family except for the money that Jessica made selling her blood plasma. So they would use a little bit of her snap benefit to buy an iron rich sort of breakfast bar because you have to sort of pass these tests and if you're, you know you might be anemic then you can't sell your plasma. So she could have a book at the library so that she could be reading because that could help her sort of keep herself calm, because the only thing worse than having to sell your blood plasma, make ends meet is not being able to sell your blood plasma to make ends meet. And she would go you know with the kids, her husband had gotten a couple of tattoos. And because of the circumstances was sort of deemed that he couldn't sell his plasma so she was sort of the breadwinner if you will. And they would go and she would answer all the questions sit on the table it took her a little longer than a typical person, because she was small. And then she would get a bank card actually they used to often give cash but now the plasma companies actually have deals with banks where it goes on like a debit card of course then there's like these associated with that debit card that nobody really knows like how much then it's the bank actually capturing the benefit of that.  So that got me interested in going back to the data sort of in this iterative mixed methods process. And we decided to say oh what we're seeing all these people are selling their blood plasma. What to make of that has there been any sort of increase in the country and it turns out. Another nice thing is that the plasma trade association is actually, I think you can see my screen right can you see my screen, Christie. Yeah, alright. The trade associate is actually quite proud of the fact that blood plasma sales actually, if we added 2019 they've more than quadrupled in about the last 12 years. We were pretty routinely at about 10 million plasma sales, you know in the mid 2000s and we sent sort of skyrocketed up and we're now up over 50 million plasma sales in 2019. So there has been like this huge increase in plasma sales and then it actually turns out that plasma supply accounts for like 70% of the world market and plasma in Americans only consume about 40%. So, you know, export is not exactly the right word but you know in effect we actually export the blood plasma for Americans all around the world. And the United States the only place where you can sell your blood plasma twice in one week. Every other sort of Western industrialized country says the health risks are too great, although we don't know a ton about that. And then it turns out actually the plasma industry is incredibly profitable right where it turns out every major plasma supplier is a Fortune 500 company they've done quite well there's a lot of sort of investors that are usual suspect like names that are involved so you know this sort of opened up a whole new world in a lot of ways right and I think sort of a benefit of both bringing data and you know bringing data as well as the actual connection to the puzzle so when our book came out we wrote about plasma. We got a sternly worded letter from the International plasma trade association saying it's fine for you to talk about poverty but could you please mention that plasma is an important component in a lot of life saving health But to me there are a number of questions right so exploitation is something that I think at least sort of merits some conversation right to understand like is what's happening when you have sort of a globally profitable industry that is built.  That's something that maybe we should talk about and what the implications are, some people think maybe we should outlaw paid plasma donation to me. I know what Jessica's other options are right for generating that kind of money, and I don't think any of them. I think in some cases you might argue this is the safest one. So another sort of option is to traffic your food stamps. So, we don't think this happens a lot overall but among people who don't have any other source of money so they can't do that sort of substitution. I think it happens a lot and it might take the form of going to a grocery store that you know does this sort of thing, and you buy $100 of fake groceries and you get $60 back. The exchange rate is actually pretty striking how consistent the exchange rates are across place they. It looks to me like the more snap dollars there are in a community actually you can see the exchange rates sort of adjust where in Chicago and Cleveland we'd see 60 cents on the dollar. In Mississippi Delta we'd see like 40 cents on the dollar because like the number of people who sort of fit the criteria of our book down there is just much higher than anywhere else. And so it's a great sort of question right do we would we rather people selling their blood plasma or trafficking their snap. It's not as legal, but it's actually extricative, you know, extractive selling your snap won't impact your health directly although it means you're going to have less food, right, and less other things and and it also is actually very illegal in a way so in most snap applications if you look down at the footer you'll see. I would say, you know if you get caught trafficking your snap that's sort of what I just described is trafficking your snap. You could face up to 20 years in prison in a $250,000 fine. By the letter of the law when you're sort of filling out your snap application. It would look like the penalty for selling your snap is actually quite a bit larger than robbing a bank. So we looked into it and sort of the sentencing guidelines for robbing a bank so about five years so I don't know that anyone's ever received 20 years but that's sort of what we asked people to understand about the penalty and where we hold it. And one other thing right so as getting to know families without any money right being struck by how much money, how much time they actually spend working right they're not in a job but how much time they spend. Some people do think of selling their blood plasma as their job. And some people actually, you know, create like a little store with their snap dollars right so we've seen sort of a living room store where people buy food with their snap and then it's like a candy store something for local kids and then that's sort of a way to traffic your snap to. And some people might say like innovative small business and other people, you know, by the letter of the law this is a felony. The other thing that really sort of struck me about this work is how much we often don't know what people actually need right so when we talk about this whole world of blood plasma. We often as sort of scholars and because of positionality we don't know really what they would use resources for right so when we do so much work so much of anti poverty stuff in kind. We take away the autonomy of people to sort of put the money where they needed the most. So, in this case I'm thinking about my work in Detroit. So, we've spent a couple of years now working with community organizations, working with the mayor. And if you had asked me when I came in like what are the biggest sort of costs that Detroiters face right that the biggest things that sort of keeps them from living the healthy and productive lives that they want to live. So somewhere on the top 10, maybe not the top 100 would have been auto insurance, but we came to see like over and over again, that this was something that everybody was talking about. And when you go back to the data you can see why. So, there we go. So this is from the zebra it's a national sort of auto insurance comparison company. And you can see sort of nationwide if we're comparing the same insurance policy the average annual cost of car insurance nationwide would be about $900. That's about 2% of income that's that a threshold the US Treasury says is reasonable right that's affordable if it's under 2%. And in Ann Arbor that same policy the zebra estimates would be $2,100 actually just renewed my policy and that's about right. The same policy in Detroit was estimated to be $5,700. And that's 20% of the annual income of someone. So, we're asking Detroiters to spend 20% of their entire annual income on auto insurance. That's like, crazy, right like if, if your housing is 30% of your income we call that unaffordable so where does auto insurance sort of fit into that and it's not because Detroit's a city and they have more accidents because in Cleveland that same policy at $1,600. So the point is like, if I were creating sort of these means tested programs, I don't always know what it is that people need the most right so this, this took me down a few past the, the first is that in thinking about what we do for low income Americans right members of society that maybe cash is the better way to do it right so I think this sort of drives the UBI debate. By providing cash we sort of create that autonomy right we sort of empower people to know what it is that are the things that they need, and do those right and sort of spend on those versus making decisions for them. And then creating a little bit of sort of inefficiency in the system right so when people have to sell their snap for money because they need that little bit of money. They lose maybe 40% of the purchasing power. And a couple of other things from that work right a set of principles that I came to is that you people need some amount of assistance at regular intervals right so I talked about those wage swings right where Travis Compton he's working he's sort of part of the working at the end of the year and at the beginning of the year now he's part of the extreme poor right and trying to understand that like people's lives don't really relate to that average income over that whole amount of time. It doesn't relate to the fact that they have these huge swings and there's some great work by Jonathan Mordak and colleagues. Rachel Schneider I think called the financial diaries project that shows like people's really these swings right where you might go 60 or 80% above or below your overall median, they're the norm rather than the exception among low income Americans. Another thing that I sort of thought a lot about was maybe simpler is better right so as policy walks when we're thinking about like how do we intervene right so for me I'm trying to think how do we intervene for very low income families. I think as policy walks we like to add that next sort of notch right or we like to think about what where things should change and complicate and try to solve all of our problems by over complicating policy. Sometimes that helps and but sometimes it makes it more difficult right or people this is sort of a very libertarian I think argument of saying like people. Whether it be employers or whether it be people receiving benefits or you know people that they're interacting with they they know how to sort of get around those notches so maybe it's better to be as simple as possible, rather than complicate things more. By being as simple as possible that gets you into sort of an age old debate right universal versus targeted. So if we want to tackle poverty in the United States are general approaches always been to be very targeted to say, we only want to give money to people who are like below the line by which they need help. We really don't want to give people money who are above that line. And the good impulse and that is saying like we really want the money to go to the people that need it. The bad impulses that you sort of spend a lot of time thinking about who the people are who are going to try to cheat in right and the stigma of the welfare queen and sort of extreme racial dimension of that right where we're sort of problematizing individuals based on maybe a couple of examples or maybe just based on this. And the impact is that it means all of our systems having worked in state government sort of are geared towards keeping people who don't deserve benefits from getting them, rather than making sure people who are eligible for benefits are eligible for right when you go to a universal system, you spend more money. Right, so by saying you know what we're just going to give the exact same amount to everyone, or maybe not everyone but maybe like all low and middle income families. And if you do that right then you don't have certain segments of the population that's like is not fair that they get something that I don't. And, and then also you sort of don't have to do the work of saying who deserves it and who doesn't right because everybody gets the same thing and this creates a sort of simplicity. It's possible that in that simplicity we find ourselves in a much more equitable environment right so in our current means that's a system that really tries to target need. I think that groups who disproportionately are impacted by poverty, people of color, black Americans in particular right who sort of have to deal with all of these different sort of layers of structural racism across the board that they might sort of be able to access those benefits but with our refundable tax credit policy because right now the programs we have are all tied to earnings.  So the current child tax credit is one where you have to have $3,000 of earnings before you start to accrue your child tax credit. And then with every dollar you earn you accrue more benefit. And that means that about a third of all children are in families who don't earn enough to get that full child tax credit benefit. And half of children who are black are in families who don't get the full credit. That's not equitable at all right that to me if we're thinking of this as poverty policy that doesn't make any sense. And, and so you could sort of take an approach of saying you know what let's just sort of shift that whole register down. And make it sort of more of a means tested program or you can say, let's give to children who are struggling the most the same thing that we give to middle class and sort of upper middle class kids as well and that sort of takes a universal approach. So it's more expensive of course, but it's maybe also more politically stable over time. And by treating everyone the same we make sure that we don't sort of disproportionately treat children sort of children who have the most to overcome treat them. Not the same right that we, we give them less.  And as a society we have a reason to make sure that it's done well. And Canada actually has a has a benefit and they've been so happy with it they've expanded it a number of times. And as they expanded it they saw a child poverty fall by about 30%. And this has the benefit of being this is a, you know, a universal or near universal policy where we just say, every family who's raising kids deserve some help from the government to make sure they have the resources to do that as well as possible. And the most effective way to give those resources is in cash. And in terms of like dealing with that intra year instability, the best way to do that is cash and regular intervals. So all of those sort of principles sum up to something very simple which is just to say, what if we gave every family with kids $250 per child per month for years. Maybe we do more for little kids because it turns out those little kids are really expensive. Right. And maybe we phase it out at the very top. And what would that do, how would that change things. Well, the paper that I sent you sort of focuses on what I care about, right, which is poverty reductions. Let's see if I can share it. This is estimates using current population survey data. This is our, these data are not very good, but there are official poverty estimates. And you can see right now so I think these are probably 2016 numbers. So the child supplemental poverty measure, which is sort of like the full accounting of income possible about 16.7% of kids fall below this poverty threshold. If we implemented $250 a month $250 a month child allowance that would fall to 9.6% right so that's like 3540% poverty reduction. And then the number of kids that are below half of the poverty line right so not at like an income of like $25,000 a year or less but at like $12,000 a year after you account for everything would go from about 4.3% of kids to 2.1%. And so that's cutting it about half. And the number of families who are like extreme low cash income right the ones who motivated my book there's about, if you look annually it's about 1.5% of kids and we think it's about 4% of kids who experienced spells over the course of the year. But we essentially wipe that away right so this simple policy of just saying, everybody deserves a little bit of money, because government has a reason to make sure children have the resources they need to be successful. It means that we would just like make my book a historical artifact right there wouldn't be anybody, essentially anybody below that line. And this would be would cost us to the tune of looking at that 200 universal $250 a month option. And if we fold in the current child tax credit which as I mentioned sort of disproportionately goes to higher income kids, we're looking at a sort of a net cost around $90 billion. So, at one point $90 billion was sort of like a lot of money, right, and it's been interesting to watch the progression of this I'm going to just tell you the political story and then I'm going to close out. I think I'm going to be pretty close Christy to the time a lot many gave me she's not looking at her watch just yet. So, we published the paper which some of you may have read and had a conference the Brookings Insta Brookings did a conference for us. We all got together, and then I went up for full professor a couple years ago, and got the comments back I did get promoted. But I always remember sort of one comment in there. The child allowance paper was one of the papers I included and one of the reviewers said I guess it's fine for Professor Schaffer and his colleagues to think about policy proposals that never have any chance at all of becoming law right that are basically pipe dreams. And right about the time when he wrote that. Some senators US senators Michael Bennett and shared Brown they introduced bill called the American Family Act that was essentially identical to our proposal right just saying $250 it sort of phases out at income above 100,000 paid out monthly. They're fundable that's the important thing of saying even families without it tax liability can get it if they file. And you know when they, when they introduced it it had a handful of sponsors I would definitely say it was in pipe dream territory, but over the last couple years, virtually every Democratic Senator has signed on. 48 or 49 Democratic senators. 180 190 members in the house. It was this proposal two years of funding for this proposal was included in the heroes act which was passed through the House of Representatives. As like their next thing that they wanted to do in covert response understanding like families are in the double triple or quadruple bind right now families with kids compared to everyone else and in the first care that we did almost nothing extra for them. In fact, you know the EIP the economic incentive payment counted gets it like 40% of adults. President like Biden included this measure in his proposed sort of economic budget plan, about two years of funding. And then recently Mitt Romney identified it as sort of the number one thing where he would see bipartisan, the possibility of bipartisan collaboration.  Now, Romney is really interesting right because Romney. Let's see, I think Portman also from Ohio, and then it looks like Marco Rubio is actually very interested in this ID idea and Mike Lee. So that starts to get you to numbers where you could actually see it passing and importantly because again it's tax policy, it only requires a majority vote in the Senate so it doesn't have to sort of pass a filibuster. And one of the things that's really interesting is, you know, when Romney talks about it. When Rubio talks about these ideas. It's never about poverty. Right. It's, it's all about like families, having a hard time sort of making, you know, it's getting too expensive to raise families. And also that so many of our policies actually they, they don't support families who have maybe a stay at home parent. So when we're talking about like universal preschool right we're sort of predetermining that that's where kids would go. So the child allowance has some appeal, right on that front because it provides a benefit that sort of adds useful to to to working parent families and families where someone wants to stay home. So like the questions going forward are to me as I think about the journey right is cash the best way to help families. Should we do universal versus targeted policies and then finally doesn't matter, right. Doesn't matter whatsoever if somebody like Mitt Romney has an entirely sort of different set of motivations for doing something like this right do is it important to me, I think it's not important to me that he recognizes as I think perhaps the best thing I've ever done to reduce child poverty and especially the deepest forms of it, as long as he does it. And that sort of leads me to reflect about like how many times like is it the matter of when I'm trying to do policy analysis or I'm trying to do policy advocacy that I'm trying to convince people of a motivation versus sort of figure out what in a policy if there are policies where completely different motivations get you to the same point. Okay, I'm going to stop there. Thanks for letting me go a little bit long and just love to talk about whatever people are interested in. Okay, if you all want if the folks want to either raise your hand either by using the little icon at the bottom or by unmuting yourself. Or, I mean sorry showing your video and then like like this raising your hand that works too. But I'm going to go first because I can. So, you know, the thing that I think is so interesting about this is how would you even get the money to people though I mean you saw like 9 million people that didn't even get their COVID stimulus payments because so many low income folks can't don't have bank accounts and so have you moved that far, not to minimize how far you have gone so far but it just seems like a huge practical hurdle. I'm curious what thoughts you have about it. Yes, it is a practical hurdle, but actually not as big as you might think right when we're thinking about doing something that would be recurring. So, if we're thinking about one of the issues with the EIP is that we never do that sort of thing, right. And so we didn't have any mechanism to do it. And so actually one of the longer term benefits of this is you you could imagine a scenario. It does turn out right when we have programs that are meant to send money to people. We're actually pretty good at it right so social security you don't, you don't have huge number of seniors who over the long term are like, Oh my gosh they keep sending my social security to check to the wrong place we were pretty good at it. So, you could imagine a scenario where like people are given the option to either direct deposit it, or to put it on a debit card so we have 43 million families, maybe. Yeah, I think we're about 43 million on snap, and they receive all of their benefits through an electronic benefits card. And in fact, like when we started looking at coven, like what could we do in response to coven. The single easiest thing for us to do was to shoot money to people's ebt cards. And Michigan actually like all of the issues with that were actually in like getting the approval when when we're setting up new things so like they set up new snap benefits for families but then they were very complicated and we had to get approval from us da and they took a lot of time right the actual sending money to people on those cards, we could do it, like in no time at all. So I think the benefit of this is there is some upfront costs but it's actually something that we have a record of doing well when we put it in place. And then we would create a mechanism by which at least families with kids, we would be able to like shoot the money with none of that costs, the next time we have an economic crisis so the problem with the eip was that we, we don't have any mechanism to do it so that's actually in some some ways sort of solves the problem for us. Go ahead Asher. Yeah, sure. Hey, so cool.  Can you talk about so the benefit is monthly. Of course tax returns are annual. Can you talk about situations in which someone may have earned up quite a bit in six months or for several months and then quite a very little and how that would actually operationalize. Great question. Okay, so the right now we're in a situation right where we have the earned income tax credit, which is, it pays out annually and we had a way to do that quarterly and everyone sort of thinks, Oh nobody wanted a quarterly because they like the four savings and in some place that's true. But also like if you were going to do the quarterly filing. You had to get your employer to sign a lot of paperwork.  And they might end up owning money. So the way that we handle that here is the biggest sort of part of the issues is sort of the lower end of the register, right. And we want to keep the EITC as it is right there actually I I'm a firm believer that there are benefits of having sort of a lump sum payment right so the international evidence is like if you give people a lump sum they make capital investments. If you give them on a monthly benefit they like pay their rent and and buy food. And, and so we think you actually need both. Right. And, and so in actuality by also having both, we think that we basically mitigate the issues that you just described right where the EITC is actually going up as your earnings go up and then it sort of phases out right as your child tax credit goes up, like it goes to its top, and then stays and then phases out at very very high incomes. So we think that by sort of doing both you can do the child allowance monthly, and then sort of the EITC register actually sort of saves you from any big bills at the end of the year because that's sort of going up in the stability of the child allowance and you don't have to be scared of that. And then, you know that's one of the reasons for sort of phasing the child, the child tax credit out at very very high levels is that means sort of, you're going to get up to there before you sort of have any of those sorts of problems. Kevin. Hi Professor Schaefer I thoroughly enjoyed your presentation and just how you started with different things you notice around plasma and people selling food stamps EBT. My question for you is, we're in COVID and a lot of people are referring to what's happening with COVID in the recession a C session, a C session because so many women are having to leave the workforce. To support children so I guess essentially they're allowed to stay at home moms now. And so I would love to know how do you see childcare allowances as a way to an equitable recovery post COVID. Well, I'm thanks and I, I feel like I'm, I don't know I feel like I'm on all of these questions I'm sort of think my answer is actually think that's why this is a good policy in this particular case right because we have so many cases. So a child, you know a child allowance test child tax credit families can use an exactly the ways they submit right. So I can imagine a lot of families, you might start using this 250 a month to, you know 500 if you've got two kids 750 if you've got three kids to pay for some sort of additional right if you're at home or maybe it's childcare to allow for some of that you could use it for childcare if you are still you know working. But you can also use it. You know, pay your transportation costs to get to work or to buy that new computer right that's going to allow you to do your job at home. So it's really it's sort of agnostic about what it is. People should be spending their money on right now and in that way I hope that it's responsive to the moment right where basically like people's lives are heterogeneous. I don't think we have a totally there's no like you know every family needs this. It's great that we're doing digital devices right and I was really proud that Josh Edmunds. My team member was a part of the effort in the city of Detroit to get digital devices to every dbscd. On the other hand, a lot of those kids probably had devices some of them don't, but a lot of them did. And so we spent money on them in that way. And so the sort of the question the question on principle and also on like policy efficacy it's like would we have been better giving those families money and saying you could use this for a laptop or you can use it for something else right. So that's the that's the key is that sort of it's got the flexibility. And maybe that means we can't see the impacts and any one sort of domain that's I think a question that we have to ask but, and then I think it does sort of, you know, to your point, really, I think like this. This crisis has hit families with kids particularly hard right and particularly low income families with kids. Usually if you're losing jobs, you can still depend on schools, right. And both of those things are totally in flux. There's a lot of instability which we've already talked about is really challenging for people. So I absolutely think that like we should do something specific for families with kids who are struggling I know you know it's a challenge for me and and financial insecurity is not an issue right so when we I was a big advocate with the economic impact payment of saying, you know, why would we count kids as 40% of the cost of adults right maybe that makes sense in some cases but it certainly doesn't make sense now so we should absolutely do something for families with kids. And I think because people's challenges are so diverse right now money is a good way to do it. Kevin then to Anna. Thanks so much for talking with us today. I mean, I think this, this type of proposal would have a huge impact and it's great to see that there's more political support for it. But it seems like, you know, proposals have more political support when they're targeted to a specific population, you know the EITC to working people or this to you know families with children. And I've alluded to this and you know your presentation and answers to a few of these questions but do you think that they're, if there were no political constraints, would it be best to have a true kind of universal anti poverty system something like the UBI, or is it really more efficient, more fair, you know, whatever to to target programs towards specific populations and kind of a system.  Are you thinking about it that way, like because it's families with kids. I mean I think it's much less, I think it's more universal than a lot of other programs, but it's still somewhat targeted. Okay, yeah, fair enough. Yeah. So, I'm very interested in UBI as a, as a broader frame. I haven't sort of conceivably figured out how you do it. So, you know, one thing I will say is the policy dollars I think when you really change social. When you really change like the fabric of society you want like a really, really, really good reason to do it. And UBI would really, it would require that right so any sort of tallying up of of of how much it would cost gets me to $3 trillion maybe 2.5 trillion so you're talking about like doubling the federal budget and to me, I'm, I'm not ready to go that far right, but I do think I do care more about kids and families with kids and I guess other folks and so that, you know, I think some people might say I sort of then slip into that deserving versus undeserving poor frame, but I think there is sort of this clear sort of societal reason to invest in kids just with like all of the stuff we've heard about sort of the long term investments. And then I also think it's a matter of like, we can do this, we can do child allowance for $90 billion a year. And if it goes really well. I think that opens the door to thinking about like okay, how do we, how do we universalize us a little bit more. And, but on some levels I also sort of feel you know like when we introduced the child allowance, when I wrote $2 a day UBI was like nowhere on the political terrain right we didn't even mention it in our, our book and I was like, then I started talking about it. And everybody's like, Oh, this crackpot liberal, you know, professor is spending all the money and then somewhere between like starting to talk about it and when like the paper actually came out. It actually became kind of like the, you know, it's almost like the moderate idea now, you know, so that also I think it's an interesting testament to me of like, how far the thinking of some group of people I'm not even sure who it is, although you know UBI I would say, both of these, one of the really interesting things to me about UBI and child allowance is the same political fault lines don't appear, right. So, you know, I'm thinking of Bob Greenstein, he's a guy I admire a lot he ran the center on budget policy priorities. He thinks this is a terrible idea and frankly they've been like trying to shoot it in the foot for a while, because like he really is like we're never going to spend that kind of money and, you know, you, you want to use the money you have on the very poor so we got to do means testing right and so he's worried about that. Whereas, you know, I have a good friend at the Cato Institute, whose name I'm blanking on right now, who really likes the idea right so I'm like gosh I never expected to like be having this easy like yeah don't we all agree on this you know with like at the Cato Institute and like Bob Greenstein is like adamantly opposed. So I do think that, like, there's something there which is useful, I think in terms of like figuring out how we're going to do this. Okay, Professor Delahant you get the last question. Yeah, I don't think I don't know if we could answer it in a couple minutes, but thank you. It's good to see you too. Thank you for your talk. Yeah, I mean, I, you know what you said congratulations also in terms of getting you know so much support, and I wanted, I wanted to find out if you had reflected on, you know, and proposing policy. If you've reflected on ways in which you can get support from different, you know you talked about having the same angle but different motivations. I don't know if you've reflected on a way to think about policies that we are proposing because it is so tough to actually have them go forward. Yeah. Yeah, I so I've been thinking a lot about that and I don't know.  I'm on a trip walking. Awesome. Had a lot of sugar today. Yeah, I got a Fitbit and I go on a lot of walks with my dog and I do my meetings so everyone knows about my dog barking at stuff so that's I'm all I'm all for it. I, I think this is really interesting fodder right in trying to figure out like one thing I think it's a reflection like figuring out about us right and how much like how important is why we think we should do things versus the actual policies right and that's like, that's a little tough to grapple with do what is what I really wanted somebody to like acknowledge this thing in society that I'm really upset about, or is what I really want is like get more money to people and, and like just, I think there's like a reflective practice there just sort of figuring out what it matters because I also I do think policy should more often start with principles, then, then like cost benefit. Honestly, I think we people what people care about as principles and so we should be thoughtful about that but I think some of it is really understanding who the people are who you sort of you need and what makes them tech. I'll just end with one example where I got interested in dental care right and the lack of access to dental care. And I saw it in $2 a day a lot when I'm meeting with families like Jennifer Hernandez just she she just her mouth she had like serious issues with her gums, and you can see why the research suggests like that really inhibits her ability to get a service sector for sure. And so I got really interested into like mid level dental practitioners and the idea that like we could, we could train someone in a relatively short amount of time to do about 50% of what dentist do actually generally on a day to day basis. And so I got really interested in that and it turns out dentist really as a group they really didn't like the idea. And actually my first professional hate mail was from dentist. I don't know if there any dentist and the call but I saved it. It was a big moment for me. And, but who really does like it is Mike Scherke who is a very conservative, you know, head of the Michigan State Senate, and he, after some advocates really took the issue on so I sort of saw my roles like we convened an event at Michigan. I took a lot of the fire I was like trying to create a, like a pilot program, and then some advocates were like you know what, we think there's enough support here we're just going to do it, and, and they got Mike sure to their credit he became the champion. So, at the same time I was writing like op ed after op ed about why that guy. You know shouldn't put work requirements on Medicaid I was like cheering him on writing op eds about why dental therapy is a good idea. So that's like what I call one of these crossover issues auto insurance with another example of that right when we I think sometimes when we stop and listen, we can get out of like our own sort of heads about how we perceive the world, and be like, Oh, yeah, I can see why auto insurance, you know, 20% of your income is crazy. We can do something about it and like one of our sort of closest partners with that was the Mackinac Center which is a libertarian think tank here in Michigan so I guess like trying to change the lens on our issues like 90 degrees, sometimes, and have it not be about what we think is compelling about the policy but really taking the time to think about what they think is compelling and, and I think one place where like lots of people are like you have to show like the cost effective part of that. And I've never actually found that to be true I've never gone into like a Republican legislators office and been like we you know in the long run we save money on this I just don't think they buy it. You know in the case with Mike Scherke like the idea of a mid level provider was useful, because he doesn't like government that sort of inhibits you know red tape of government and he sort of sees occupational licensures as a piece of that so if somebody can do the work with two years of training.  I shouldn't get in their way and to me actually I can get behind that too because I'm like, you know a lot of people who don't have money. They, they don't get that training right they don't become dentists because they can't afford it and what if. What if they only had to go to school for two years like maybe, maybe that would open up opportunity so I guess those are my only party thoughts is like, turn the lens, figure out what really makes them tech and see. Yeah, Cindy bank is here on the line maybe she should do a whole event on this but those are some of my reflections. Thanks everyone that I really enjoyed every question. Thanks so much, Professor Schaefer this was really, really interesting can we all take a moment to acknowledge him please either like with your little hand symbol or you can show your video for a second. Yay. And we all need to go for a walk and follow it honestly. That's right. Thanks very much for your time I hope you all will join us in January or talk then will be led by Linda teaser from LSA is Department of Economics.


With the exception of complaining about the election and inciting a violent insurrection Donald Trump hasn't really done much of anything since losing the election He has golfed But I mean he just he's given up even trying to govern and that's that's an issue, right? You know, I'm a little bit torn on this on one hand like I Want him to go away because anytime he speaks and makes a public appearance appearance. He just fans the flames further But at the same time during a global pandemic, we do need Competent leadership at the federal level especially when we're rolling out a vaccine when we need federal leadership To deliver, you know money to states aid to states So, you know, it's a mixed bag, but it still is really stunning that Trump has just basically gone In fact, it's been six days since he's made a public appearance at the time I record this video and CNN did a segment on this that kind of puts it all into perspective about his overall schedule since the election President Trump hasn't been seen publicly in six days and his schedule has been mostly empty since election day If you take a look from Tuesday, November 3rd until today more than half of the time 46 days no public events at all have been listed on the president's schedule But Trump has spent 16 days golfing on one of his own courses CNN contributor Garrett Graf is joining us now He's the author of several books including the threat matrix inside Mueller's FBI Among them so Garrett if you know little to nothing is on his schedule.  Well, what we know so far is that he has spent a lot of time grousing, you know talking to aides friends his dwindling pool of allies Complaining about this election complaining and trying to pressure election officials to try to overcome it And now we understand, you know in the ten days or so since the Insurrection at the Capitol when he has even gotten more toxic as Caitlyn Collins was just saying He has turned his focus to trying to squeeze out a few final actions as president We are expecting in the next 48 hours at some point to see as many as a hundred pardons come down from the president And this is something that Typically all presidents do in their final hours, but no one has ever abused the pardon power as much as president Trump has so everyone's waiting with baited breath to see who ends up on that list first of all Let me just say a side note Garrett's book looks like porn for resistance liberals And I'm so glad we're past the days where liberals are like worshiping Robert Mueller They were like trying to like sexualize Robert Mueller and it was just really creepy and weird So I hope that we can move, you know past that because those days were some really dark times in American history. I Couldn't resist I had to like make a note about his book but putting that aside we actually do know who Trump is planning to pardon and The first individual who will benefit from a Trump pardon is rapper Lil Wayne. This is according to double XL magazine Trump's administration is currently preparing paperwork to pardon Lil Wayne Now if you're wondering why out of all of the rappers He's choosing Lil Wayne and not like Bobby Schmurda or a BG. Well, it's easy It's because he's basically repaying a favor Lil Wayne Basically endorsed him, you know indirectly it was a tacit endorsement, but nonetheless, you know It was a nod to Donald Trump and Donald Trump remembers that Lil Wayne tweeted this out during the 2020 election Just had a great meeting with Donald Trump besides what he's done so far with criminal reform The platinum plan is going to give the community real ownership He listened to what we had to say today and assured he will and can get it done so, you know Trump remembers that and Trump is most likely I'm assuming gonna pardon his allies and people who did favors for him Like he's gonna use whatever time to just like make sure that he sets himself up and his allies up for the future But like these 100 pardons and you know commuting sentences if if we're talking about like nonviolent drug offenders I would have no problem with that But if we're just talking about like this this cronyism where Trump is repaying debts and favors to people I think that's pretty messed up But when it comes to the end of the Trump era I really hope that folks see that this was never about America or the American people This was always about Donald Trump like this this is kind of a mask-off moment to have a president like disappear go MIA Because he lost an election and he's butt heard about that like this should prove to folks That he he never cared about you. This was always about him. This was a personal project Like you often hear chuds talk about how well, you know, he was well off He was rich. He didn't have to become president, but he did because he cared about America.  He was running for president as a vanity project There were numerous reports that that was the case and that that would be like the launching pad for some type of news network Or TV network or something along those lines But he never cared and this shows it like now that he's not gonna be in power And he won't get credit for the things that he does like if he puts in place an actual cohesive plan to Competently roll out the distribution of the vaccine, you know, he probably thinks oh well I'm not gonna get credit Joe Biden will get credit So why would I care like he never cared? But I mean his his supporters are are in a cult So they're not going to see him golfing for 16 days During a global pandemic since losing the election as a sign that he doesn't care about anyone but himself They're not gonna look at him pardoning his allies as a sign that he doesn't care about anyone but himself and those in his inner circle You know, this is a very deeply narcissistic and selfish individual and his supporters Just are never going to see that and you'd think that if they were gonna see it It'd be now when he's gone MIA When you know, if you truly cared you could be using these last days to make a difference You know, you'd see some kind of sad posts of his supporters like he'd complain About losing the election and that it was stolen from him and then his supporter would respond with basically Okay, yeah, the election was stolen, but we really need a stimulus Can you do that for us with the remaining time that you have like I'm paraphrasing of course But you'd see you'd see the screenshots of this and you know, this really is a cult They'll never abandon him. They won't take that as a sign that maybe he doesn't actually care Maybe he's just a self-serving Narcissist but you know, it doesn't matter because it's all coming to an end soon and Whether or not the Trump era itself is over that is yet to be determined I think that Trump's influence within the Republican Party is waning largely due to the Capitol insurrection But you know, we'll have to wait and see I think that the Republican Party will adapt and kind of embrace some of Trump's tactics Well, not like being overtly Trumpian but you know, it's almost over and he's he's just sulking He's not doing Jack's shit And I think that this wouldn't be a story if the circumstances in the country weren't So bleak, but the fact that he's not doing anything. It just it speaks volumes like his silence is deafening But again, I'll be honest part of me wants him to kind of like hide his face because Anything that he says like it. What is that going to do? realistically for the country He's not gonna help heal wounds. He's not gonna bring people together He's not going to act in a competent way that puts us in a better position. It's just so maybe it's a good thing I don't know but either way. I think it is still very telling that he is not doing anything Subscribe if you like this video folks Mike's tremendous and he's doing a really really good job Many people are telling me about how wonderful the humanist report is Bigly


Hello and welcome to the session in which we'll discuss market structure and pricing strategies. What is market structure? We refer to the organizational characteristic of a market. What is that? It includes the number of firms operating in the market, the degree of competition among them and the exit and entry barrier. What does that all means? Let's take a look at this market. So this is the market here. In this market, basically we have one, two, three sellers. So the number of operating firm in this market three. Now, how tough or how stiff is the competition between those? Well, it all depends on the product that they're selling. Is it unique product, not unique product? On other factors such as the uniqueness of the product that they're selling? Are they selling something that is considered a commodity where you can find everywhere or are they selling something unique? Also, how competitive are they in terms of pricing their product? It all depends how many people can enter this market if let's assume this is operating in a small town. If the municipality of the small town allows three other firms to operate and everyone is selling the same product, then guess what's going to happen? The prices, the pricing strategy will change. So different market structure will have different implication for pricing strategies. Now, why as accountant, as CPAs, we have to learn about market structures? Because at some point you might be auditing a company or preparing financial statement of a company. You have to understand in what type of market structure this company operates. So you can understand their pricing strategy. You can understand the revenue structure. And that's very important. Revenue is the first item on the financial statement and how the company price their product will drive their revenue. There are four common market structures that we need to be familiar with. Perfect competition, monopoly. Those are the two extremes. So we have monopoly and the perfect competition on either extreme. Then we have monopolistic competition and we have a monopoly. What we're going to do, we're going to discuss each one of these market structures separately, including the various pricing strategies that companies would undertake, assuming they are operating in this market structure. Let's go ahead and get started. Before we proceed any further, I have a public announcement about my company, farhatlectures.com. Farhat accounting lectures is a supplemental educational tool that's going to help you with your CPA exam preparation as well as your accounting courses. My CPA material is aligned with your CPA review course such as Becker, Roger, Wiley, Gleam, Miles. My accounting courses are aligned with your accounting courses broken down by chapter and topics. My resources consist of lectures, multiple choice questions, true-false questions as well as exercises. Go ahead, start your free trial today. Starting with perfect competition. What is a perfect competition? Well, let's take a look at this picture. Before I discuss perfect competition, this picture is a perfect competition. Those are two stores, store one and store two. Here we go. Those are two stores. They're basically selling the same thing. They're close to each other. Let's assume I believe these are corns. This lady is selling corns and this individual is selling corns as well. She's selling tomatoes and he's selling tomatoes. Guess what? In this type of market, they're selling the same product. They are going to compete on the price. Why? Because this customer here, this lady here, she's going to look at both product and we're going to assume they're bringing the tomatoes from the same suppliers or the tomatoes are fairly the same and the corn is fairly the same. So they're going to basically, since they are also close to each other, they are going to price the product almost the same. So they are dealing in a perfect competition.  What does that mean? It means this individual cannot control. It means this individual, for example, they cannot have too many tomatoes or too many corns to control the market. So everybody is basically don't have extra power. So the key feature of a perfect competition is many buyers and seller, as I mentioned, no individual buyer or seller can influence the market price. So who sets the price then? The market sets the price, supply and demand will set the price. Homogeneous product, the products are identical. So the consumer, this lady here, she has no preference for one seller over the other, other than the price and the price cannot be easily raised. So again, if one of these sellers raised the price, the customer will go to the other seller. There's a perfect information. Buyers and sellers have access to all relevant market information. It means there's nothing hitting about the corn, nothing hitting about the tomatoes that both parties are selling. And there is easy market entry and easy exit entry. What does that mean? It means we have those two stores here. We can easily bring another store, open a third store and a fourth store. So in a perfect competition, well, you could easily enter the market and simply put in a perfect competition, your profit is close to zero. Why? Because you are competing on price. So prices are determined by the factors of supply and demand. So individual firms are price takers, not price setters. Price takers means what? It means whatever the market determined the price, they have to go with that price. What does that mean? Let me give you an example about this. Let's assume this seller here, this gentleman, bought the corn last week and the Bush law of the corn was let's assume $6. Okay? Now in order to sell it, he got to sell it for more than $6. This lady here, she bought her supplies today and the market happens to be $5. So she bought the, she bought it $1 less than him. So she can sell it for $4.50 and still make a profit. He's going to be forced to either take a loss or not be able to sell his corn. Why? Because now the price dropped. So in a perfect competition, the firms are price takers. It's set by the market. It's set by the market. An example of perfect competition will be agricultural product, wheat, corn, often exhibit characteristic of perfect competition. Basically the price of the wheat is known, there's plenty of supply, plenty of demand, unless there's a shortage, same thing with corn. So what is the pricing competition? The pricing strategies in a perfect competition, again, firms are price takers. The focus is on maximizing efficiency.  It means operating at a maximum efficiency. You are going to, you're going to accept the market, as I mentioned this, and adjust your output level accordingly. You might have to cut, you might have to increase depending on the market forces. Sometime in a perfect competition, firms operate on a cost-based pricing. What's cost-based pricing? It means I'm going to try to sell my product, the minimum, just to try to cover my cost. Set their prices based on production costs, aim to cover their expenses and achieve small or normal profit margin. So how do companies in a perfect competition make a lot of money? For example, Walmart. Walmart is in a perfect competition because if you don't like Walmart, you can go to Target. If you don't like Walmart or Target, you can go to Amazon. That's a perfect competition. So if you're making a small profit, how do these companies operate? They make small profit, but they sell a lot. They'll try to gain a market share. So their concern is to maintain their market share and increase their market share. So since prices are standardized, firms differentiate themselves through factors such as product quality, customer service, or branding. Now, how can this individual differentiate themselves from the other seller? The gentleman can differentiate themselves from the lady or the lady can differentiate themselves from the gentleman. For example, the lady could say, look, you buy it, go ahead, finish your shopping. I will deliver the product to your home. So basically, I'll provide you some extra customer service, or this gentleman can present their product as a better product, somehow convince this lady that what he's selling is better corn than the other store. So marketing here plays a big role in branding. Otherwise, you have no extra competitive advantage and a perfect competition. Another market is called a monopoly. A monopoly is the other extreme of perfect competition. Here you have one single firm is the sole provider of a particular product or service in the market. Now monopolies, generally speaking, are illegal. For example, the US government does not allow companies to have a monopoly. For example, Microsoft at some point, it had a monopoly, and the Department of Justice made sure they don't. I'll talk about this in a moment. So you have a single seller that dominate the whole market. There is no close substitute. There are no viable alternative. You either buy our product or you have no other option. For example, utility companies, and utility companies in some area, one utility company, they cover a wide geographical area. Because of that, if you want electricity, if you want gas for your home, you only have one supplier. Well, that's a monopoly. You don't have an alternative. You don't have an alternative. And there's a high barriers to entry. High barriers mean, well, you cannot just start a utility company in that area because you need a large capital expenditure, billions and billions of dollars. You need government approval. You need so many different licenses. So there's a high barrier to entry when you have a monopoly. So new firms, it prevents them from entering. And in a monopoly, you have a pricing power. You don't care about market share because you have the whole market. So what you do now, you can set the prices that you want, but you don't want to set your prices too high where you upset the citizens as well as the government. So you have a substantial control over prices versus the perfect competition. You have no control whatsoever. Here you are a price setter, not a price taker. You set the price. So in a monopoly, the firm has the power to set prices based on its market dominance. Now, unregulated monopolies, as I told you in the US, we don't have this, can potentially exploit their market and charge as high as they can. In some world countries, you have unregulated monopolies. In the US, we'll try to keep them. We'll try to keep them under control. Examples, utilities with exclusive service territories. For example, Apple computers, their first iPhone, the first six months, the first six months in the life of the first iPhone, Apple had a monopoly. If you wanted a smartphone, that was the only viable option. They were monopoly by default. They did not try to win monopoly. They simply did not have a competition. Then Samsung came along and they started to present other alternative. But this is what a monopoly is. So firm in a monopoly aimed to optimize their profit while considering their market power. So they cannot go out of control. Differentiation and competitive pressure within the respective market structure. So they will try to make profit, but at the same time, keep the pressure off. So they don't want you to enter the market as well, give you any incentive. The pricing strategy in a monopoly, it includes profit maximization. As I just said, you set your own prices, but you take into account cost structure and demand elasticity. When I say you have a price, pricing power, well, if you charge too much, no one happened to your sales. Nobody wants to buy your product. So you have to kind of charge, but keep it reasonable. Price discrimination. The monopolist charges different prices to different customer segment based on their willingness to pay. Also, they can charge different people, different prices based on the, you know, if they can provide them extra service, they can charge this barrier pricing. They want to price their product to keep competition out to deter potential entrant and protect its market dominance. So they don't want to make too much profit, too much profit. And it's worth it for a competitor to come in and invest billions of dollars. For example, going back to the utility companies, if they're making a lot, a lot, a lot of profit, then investors will kind of join together and start the utility company because there's a lot of profit to make. So you don't want it to make it look it's, there's a lot of profit unlimited profit, then people will enter the market. So somehow you price your product to keep, to keep new, new competition out. You could also bundle your product, the monopolist offer product or services together at a combined price to increase sales and capture more, more value. A case in point is Microsoft. In 1995, Microsoft had Windows 95, Windows 95. That was the first kind of graphic user interface operating window based system, Windows 95. And from 1995 till 2001, 2003, Windows dominated the market PC. At that point, in 1996, 1997, we started to have the internet. Okay. So what happened is what would Microsoft do every time they sell you their Windows, they will bundle with it Netscape Navigator. I'm not sure you guys don't know what Netscape Navigator is. Think of Chrome. Think of the first version of something like Chrome. Chrome is the web browser. But Chrome is for Google. You have Chrome, you have Firefox, you have different web browser. Back then, what Microsoft did, every time they sold you Windows 95, they bundle with it Netscape Navigator. So what happened with all these web browser developer? Well, they could not compete because no one's going to buy their product. If everybody, if everyone is buying Windows 95 comes with it, comes with it Netscape Navigator. Why would someone invest in a web browser? Until obviously the market break them. It's important to know that these strategies are not exhaustive in terms within each market may structure, in each market structure may employ additional or hybrid pricing approaches based under specific circumstances and objective. The key point is to understand what a monopoly in general is. Monopoly is basically you have control, basically you have no competition.  Then we have monopolistic competition. Monopolistic competition combines both the perfect competition and monopoly. We talked about the perfect competition and monopoly. So something in between. It involves a large number of firms producing differentiated product. What's differentiated product? Firm sells products that are similar but not identical, creating some sort of a product differentiation. When you think of monopolistic competition, think of the fast food industry, think of McDonald's, BK, Burger King, Wendy's. Wendy's. Those are all they operate in a monopolistic competition. They sell the same product but somehow they want burgers, basically food, soda, french fries. They try to differentiate themselves. So individual firms have limited control over their market price because there are many buyers and sellers. Now if McDonald's increased their prices a lot, they would lose. So basically as long as they keep their prices close to Burger King, Burger King keep their prices close to Wendy's, that's fine. They can live together. They rely on advertising and branding. Firms engage in non-pricing competition through advertising and marketing efforts. So they'll try to differentiate themselves and I'm pretty sure you see a lot of ads for them. There are easy entry and exit. So the barrier to entry is relatively low. They're not very high, relatively low, but to compete it's going to be tough. But it's not like a monopoly where it's prohibitive. So relatively low. Perfect competition, perfectly low. It's very low. Relatively low in a monopolistic competition. They can adjust their prices based on perceived product uniqueness and consumer preference. So what they do, they'll try to make you feel what you're buying is something better than the other competition. For example, Burger King, they would say, well, our product is better because, and they'll try to kind of give you a reason why, to convince you that they want to charge you a little bit more. So the fast food industries with various chains offering slightly different menus is an example of a monopolistic competition. Some monopolistic competition pricing features. Again, they set their prices based on the perceived uniqueness or added value to their product compared to their competition. Price discrimination firms charge different prices to different customer segment based on their willingness to pay. If they can find a segment where they can charge it more, then they will do that. Promotional pricing firms use sales discounts or special offers to attract customers and differentiate their offering. Well, I'm pretty sure in the US, if you live in the US, you would receive discounts from McDonald's discount from Burger King to do what? To help increase their sales, to attract you to their store. And firms invest in advertising and marketing and branding campaign to do one thing, create a distinct market position. They want you to think they are different. They want you to think they are different, but they are not really different, but they want you to think and based on that perceived uniqueness, they can charge you a little bit more. Then we have a leg up a leg. Then we have, then we get to the oligopoly. The first thing you think of when you think of oligopoly is OPAC. What is OPAC? The Organization of Petroleum Export Countries. And this is, I don't think this is a comprehensive list, but this is the list of these countries. Here, oligopoly exists when few large firms or in this situation countries dominate the market either due to high barrier entry or strategic behavior or the uniqueness of the product you need to have oil okay the key features few large firms a few large firms a small number of firms control the significant share of the market these countries control the large proportion of the oil market in the world they are interdependence firms are aware of each other's action and consider them when making pricing decision now opac what they do they these countries they meet and they decide what the price is they're aware of each other's action barriers to entry is high okay high entry barriers prevent new firms from easily entering the market so you cannot just produce oil it's not that easy you need to find it in the ground first if you don't have it you don't have it product differentiation sometimes it may be differentiated sometimes it's not for example oil it's not differentiated oil is the same whether you bought it from Saudi Arabia Nigeria Iran or Algeria it's all the same oil pricing strategies firm consider the action and reaction of their competitors so they cannot just you know increase and reduce prices they do that for example for opac but there are political consequences to that sometimes what you have is collusive pricing in illegal collusion firms agree to fix prices or output level to maximize collective profit so what happened in the news every once in a while you would say that opac they they met and they wanted to cut output by three billion three million barrels per day they can do that price leadership sometimes one dominant firm sets pricing trend and other firms will follow for example in opac you got Saudi Arabia is one of the largest and if Saudi Arabia cuts their output the rest would follow and if they increase the rest would follow it gives them basically the signal strategic prices firms strategically adjust prices based on their assessment of competitor responses market condition and their own cost structure for example during covid they cut down their production because they don't want to produce the oil and put it you know put it in storage and not sell it then they have to reduce their prices what do they do they invest in research they don't you know they invest in research and development marketing and innovation to differentiate their product for example for oil companies they really don't need any marketing because everybody needs oil in a nutshell those are the four common market structure that you need to be familiar with as far as the CPA exam what should you do now to learn more about these market structure go to far hat lectures and practice mcq's multiple choice questions that's gonna help you what do better on the CPA exam I can only help explain the concept you got to learn it you got to do well on the exam good luck study hard and of course stay safe