Transfer pricing is the setting of price for goods and services sold between legal entities in an enterprise. In the case of the hypothetical "Illinibucks," the university is setting prices for faster service to its students, and rationing out the currency to pay for "moving up the line".
There are a few things that come to mind that Illinibucks could potentially pay for. As mentioned in the prompt, priority for class registration is huge. During the summer, I spent hours adjusting my fall schedule because courses were prioritized to students from certain majors. I sent out emails to professors, constantly refreshed the course catalog page, and registered for backup classes to get my schedule in order. If I could have just payed something to guarantee that I could have priority in registering, I would have saved a lot of time and energy. From my experience of being in RSO leadership positions, renting out equipment and rooms for meetings can be a challenge. Getting priority for renting spaces is really important for RSO's that want to retain structure and professionalism. Renting group study rooms at Grainger library can also be something that people would be willing to pay Illinibucks for, especially near the end of the semester when group projects are due. The issue with low pricing of Illinibucks could be that the demand for "getting ahead in line" for a service "A" could be higher than the equilibrium price. In that case, there would be another line to get ahead of for those that are spending the Illinibucks, which gets rid of the purpose of its existence. A high administered price for Illinibucks could get rid of this problem, but it might also lower the number of uses by too much. In that case, the infrastructure that the University has to put in place to administer this system might be too costly for the benefit that it gives the University. Another issue is that students who get a lot of financial support can buy Illinibucks and use it to get priorities on things like class registration. This would raise moral issues because students in the university would be better educational opportunities based on wealth, rather than merit. |
Sunday, October 2, 2016
Illinibucks
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I thought you evaluation of the use of Illinibucks to RSOs was an interesting take that I have not seen in a lot of other posts. I imagine that RSO meeting spaces could be a rather important part of the Illinibucks economy, as members of RSO probably would jump at the opportunity to get top priority for the best meeting spaces. This would be especially applicable for an RSOs special events, when they may want to make use of the Illini Union Ballroom, for which the competition for reservations is especially high.
ReplyDeleteWhile the too low of a price for Illinibucks usage would likely lower the benefit of the usage to students, I don't think such a price would "get rid of the purpose of its existence" as even being able to jump ahead of one person in line would represent some benefit to Illinibucks users. In any case, the situation of a second line for Illini bucks users to get through could be solved through users being able to spend extra bucks to bid themselves ahead of other users. This way, the people that want to get ahead in line the most will still get the farthest ahead in line, and the system will be made efficient again.
Overall, great and thoughtful post!
As I told you, this post never showed up in my reader. So I missed it. I'm sorry that I didn't comment on it earlier.
ReplyDeleteThe way you described how you would use Illinibucks, for registration, there is a question of whether this is a rob Peter to pay Paul approach. You get to register earlier. What happens to the people who were ahead of you in line but now are behind you? Are they inconvenienced as you were previously? That may help you, but does it do anything systematically to address the issue? Is there anything that might be done that would be a more systematic approach?