When Star Wars Episode III: Revenge of the Sith opened at 12:01 A.M. Thursday, May 19, 2005,

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When Star Wars Episode III: Revenge of the Sith opened at 12:01 A.M. Thursday, May 19, 2005, the most fanatical Star Wars fans paid $ 50 million for tickets to stay up until 3:00 to 4:00 A.M. Businesses around the country, especially those tied to high-tech industries, suffered reduced productivity due to absent (suffering from Darth Vader flu) or groggy workers on Thursday and Friday. By one estimate, fan loyalty cost U.S. employers as much as $ 627 million (Josie Roberts, Pittsburgh Tribune- Review, May 19, 2005). On the other hand, this sum is chicken feed compared to the estimated $ 890 million loss during NCAA March Madness: 16 days of the virtually nonstop college basketball games (James Paton, “Hooky and Hoops—March Rituals,” Rocky Mountain News, March 19, 2005, 3C). Are these examples of a negative externality? Explain.

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Managerial Economics and Strategy

ISBN: 978-0321566447

1st edition

Authors: Jeffrey M. Perloff, James A. Brander

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