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  • Writer's pictureDoug Howarth

Dude, Where’s My Geometry?

Let me tell you how it will be/There’s one for you, nineteen for me The Beatles, Taxman Hypernomics loves geometry. It touches markets in many ways, including the Demand Frontiers, notably as they mature. Ignoring market geometry can lead to unwelcome multimillion-dollar surprises. In 2014, CO and WA legalized recreational marijuana. CO taxed it 30%. Seeking vast riches from this new revenue source, WA taxed it about 108% (it varied by county). At years-end, WA, with a third more people than CO, made $51.7M in recreational pot tax monies. CO made $375.4M. What WA didn’t understand because they didn’t study it was the cannabis demand curve slope. While we don’t have the WA pot data on hand (they do), we have a like curve for cars. If we apply another 100% tax on vehicles, the number sold, given the demand slope, falls by about 70%-80%. As steep as these reductions are, they still don’t match the WA experience in 2014, suggesting the actual slope for recreational cannabis in that year was even flatter than that for automobiles. But there is no need to guess about this. If you study it, within statistical bounds, market geometry will “tell you how it will be.” #innovation #hypernomics #business #technology #management
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