Tuesday , May 17 2022
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Managerial Econ

Managerial Econ is hosted by a group of economists who have written a managerial economics book together called Managerial Economics. This blog add an economic analysis to quirky topical news like why uber drivers are more efficient than taxi drivers.

Facebook vs. Australia: The alternatives to agreement determine the terms of agreement

 The Australian govt. passed a law requiring Facebook and Google to start paying for news content that appeared on their sites. However, the law did not specify any criteria for identifying pages that were in violation of the law.  This uncertainty creates a tradeoff when trying to design rules to comply with the law:    An "overly broad" take down means that Facebook is less likely to violate  the law,  BUTIt also means that Facebook is likely to take down pages that shouldn't be taken...

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Enlightenment Now!

Alex Tabborock opines I hate paper straws: There is a wing of the environmental movement that wants to punish consumerism, individualism, and America more than they want to solve environmental problems so they see an innovation agenda as a kind of cheating. Retribution is the goal of their practice. If you find yourself drawn to the weird atavistic sensibility to get back to the land (which would dramatically increase our carbon footprint--remember density is green), or unplug and return...

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Can EU governments pick unicorns to close gap with US and China?

New report from the EC focusses on the number of unicorns which are thought to be a metric of innovation, the primary driver of growth.  The chart shows that US (red) and China (pink) way ahead and growing faster than EU (blue), and updates the chart below (2013-2017).[Government is the solution]: "governments should play a role in the supply of venture capital, establishing funds to invest in larger deals ... that private sector VCs avoid." [Caveat] "... our analysis recognises that simply...

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How bad is rent control?

When I get to demand and supply, I show students the unintended effects of rent control: a price ceiling below the equilibrium price results in shortages, as there are more people who want to buy at the controlled price than want to sell.  A new paper studying rent control in St. Paul shows that the policy doesn't even live up to intended purpose of transferring income from rich landlords to poor tenants: ...rent control caused property values to fall by 6-7%, for an aggregate loss of $1.6...

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Buy this book ASAP: “Rationality” by Steven Pinker

Rationality: what it is, why it seems scarce, and why it matters was an eye-opener for me. As an economist who both teaches rationality and and uses it in my research and consulting, I was thrilled ("shocked" in a positive way) to discover how narrow my perspective is. Pinker approaches rationality from so many different angles (logic, psychology, statistics), and gives so many fabulous examples of how we (mis-)use it that that I found myself underlining examples to borrow (with...

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Is inequality necessary for growth?

 China seems to think so: For most of last year, Mr. Xi trumpeted a signature program known as “common prosperity” aimed at redistributing more of China’s wealth, amid concerns that elites had benefited disproportionately from the country’s economic boom. The program underpinned many of Mr. Xi’s policy drives, including a clampdown on technology companies that were seen as exploiting their market power to boost profits. But a year later, use of the term "common prospertity" is fading...

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How is Russia supporting the ruble?

In the graph above, we see the FX price of a ruble fall and then rise. To explain this, think of shifts in the demand and supply of rubles in the market for foreign exchange.  Supply of rubles:  Russian importers and investors sell rubles to buy foreign currencies to buy foreign imports or invest abroad.Demand for rubles:  Foreign importers and investors sell foreign currencies to buy rubles to buy Russian exports or invest in Russia.  Anything that increases demand for rubles or decreases...

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