tag:blogger.com,1999:blog-62858323998846458712024-02-07T04:36:27.486+00:00HERAKLITESPhilosophy, Politics, EconomicsHerakliteshttp://www.blogger.com/profile/07234212189847785260noreply@blogger.comBlogger20125tag:blogger.com,1999:blog-6285832399884645871.post-66884537288011031852008-07-06T16:12:00.004+01:002008-07-06T17:25:35.476+01:00Vertical mergers and the nature of the firm (part 2)Intra-firm relations The traditional view of the firm is of a unitary entity with a single set of objectives. Neoclassical analysis assumes that the maximisation of profit is the sole objective of the firm, and does not typically look behind the veil of the firm to consider how the interests of individual human agents generate this objective. More recent analysis of firm behaviour has taken Fabe Tassanohttp://www.blogger.com/profile/03279119414821928574noreply@blogger.comtag:blogger.com,1999:blog-6285832399884645871.post-7834442170054399412008-04-15T21:00:00.002+01:002008-04-15T21:00:08.488+01:00Vertical mergers and the nature of the firm (part 1)What are the benefits of vertical integration? To understand why firms sometimes vertically merge, we need to look at two issues: (i) contractual relations between upstream and downstream firms, and (ii) the mechanics of decision-making within a vertically integrated firm. In particular, we need to consider why there may be obstacles to efficient contracting in the absence of integration, and in Fabe Tassanohttp://www.blogger.com/profile/03279119414821928574noreply@blogger.com0tag:blogger.com,1999:blog-6285832399884645871.post-48328902193616293772007-12-30T10:25:00.000+00:002007-12-30T15:10:46.218+00:00Two and a half millennia after ParmenidesRaymond Tallis has written an interesting article about the Pre-Socratic philosopher Parmenides in the latest Prospect, as a taster for his forthcoming book on the same topic.The Pre-Socratics suffer from our having relatively little information about them, and the fact that little of their material survives. They were also in the invidious position of having to invent philosophy from scratch, Fabe Tassanohttp://www.blogger.com/profile/03279119414821928574noreply@blogger.com0tag:blogger.com,1999:blog-6285832399884645871.post-70396791629568940422007-11-30T17:38:00.000+00:002007-12-23T10:30:59.934+00:00The theory of the second-bestOne of the few provable useful results in economics is the one about markets producing an optimal outcome. If all goods and services in an economy are traded via perfectly competitive free markets, the resulting outcome is efficient (i.e. Pareto-efficient), i.e. there is no other possible arrangement of available resources in which some would be better off and no one would be worse off.By Fabe Tassanohttp://www.blogger.com/profile/03279119414821928574noreply@blogger.com0tag:blogger.com,1999:blog-6285832399884645871.post-32402959538760381592007-10-29T09:00:00.000+00:002007-12-23T10:30:11.046+00:00Credible threats, moral hazard and Northern RockContinuing last week's post on game theoryEntry deterrence'Entry deterrence' is an example of trying to manipulate a rival player's moves. In this case, it involves an incumbent firm trying to prevent the entry of potential rivals into a market.Successful entry deterrence depends on avoiding the non-credible threat problem. If you want to make things too difficult for a potential entrant to Fabe Tassanohttp://www.blogger.com/profile/03279119414821928574noreply@blogger.com0tag:blogger.com,1999:blog-6285832399884645871.post-14867550010833432732007-10-22T09:00:00.001+01:002008-05-08T17:00:56.502+01:00A short introduction to game theoryIn game theory, we are usually looking for one or more equilibria (ideally only one), which we regard as representing the likely outcome of a particular situation. The principal criteria which an equilibrium is expected to satisfy are the Nash equilibrium condition and 'subgame perfection'.Dominant strategiesWe can write the strategy of player i as si. By strategy we mean a particular move or Fabe Tassanohttp://www.blogger.com/profile/03279119414821928574noreply@blogger.com2tag:blogger.com,1999:blog-6285832399884645871.post-33352052346628225282007-10-08T09:00:00.000+01:002007-12-23T10:30:11.046+00:00Depreciation and price regulationPrice regulation, for example in the case of a monopoly supplier, often involves determining an acceptable rate of profit. Profit is normally calculated after ‘depreciation’ i.e. taking account of the wearing out of capital assets. It is sometimes suggested that, since depreciation is not a real cost, actual capital expenditure should be used instead to determine the real profit level under Fabe Tassanohttp://www.blogger.com/profile/03279119414821928574noreply@blogger.com1tag:blogger.com,1999:blog-6285832399884645871.post-83786899904114824112007-10-01T09:00:00.000+01:002007-12-23T10:30:11.047+00:00Charts of the monthThese are two charts from Marc Faber's recent lecture 'Gloom, Doom, or Boom?'. The first (source: Ned Davis Research) shows that the last time US debt grew to such stratospheric levels as now was in the 1930s.The second chart (source: Stifel Nicolaus) suggests that we are due for an upturn in consumer inflation.Fabe Tassanohttp://www.blogger.com/profile/03279119414821928574noreply@blogger.com1tag:blogger.com,1999:blog-6285832399884645871.post-65330400141853833722007-09-24T09:00:00.000+01:002007-12-23T10:30:11.047+00:00Will the internet increase monopolisation?The internet has been enthusiastically proclaimed as a harbinger of greater competition. The work of Thomas Malone, among others, has predicted an 'electronic market' effect. The results of this are alleged to generate a highly competitive, rivalrous business world.Prima facie, a reduction in transaction costs might be expected to facilitate marketisation of business-to-business (B2B) commerce Fabe Tassanohttp://www.blogger.com/profile/03279119414821928574noreply@blogger.com4tag:blogger.com,1999:blog-6285832399884645871.post-45855581019755716682007-09-03T09:00:00.000+01:002007-12-23T10:30:59.935+00:00Such a thing as societyIs there such a thing as 'society', over and above a collection of individuals? Curiously, the question is now associated in many people’s minds with Margaret Thatcher, who said:I think we have gone through a period when too many children and people have been given to understand "I have a problem, it is the Government's job to cope with it!" or "I have a problem, I will go and get a grant to copeFabe Tassanohttp://www.blogger.com/profile/03279119414821928574noreply@blogger.com4tag:blogger.com,1999:blog-6285832399884645871.post-26889258761048356392007-07-30T09:00:00.000+01:002007-08-31T11:40:06.318+01:00The purposes of religionIn a secular society such as ours, religion can seem an odd phenomenon. Consider the beliefs that are involved:- belief in the existence of an invisible deity;- belief that the wishes of the deity can be ascertained by studying scripture;- belief that people ought to comply with the deity's wishes.These things can seem peculiar from the point of view of someone brought up without religion. A Herakliteshttp://www.blogger.com/profile/07234212189847785260noreply@blogger.com1tag:blogger.com,1999:blog-6285832399884645871.post-67671058722660824182007-07-23T08:00:00.000+01:002007-08-31T11:40:06.318+01:00GodRecently there has been a good deal of debate about the existence, or otherwise, of God. Christians face the problem that the God of the New Testament is normally presumed to be both omnipotent and supremely good, which seems hard to square with the existence of suffering. It should be noted that moral "goodness" is notoriously difficult to define with regard to human behaviour, and is presumablyHerakliteshttp://www.blogger.com/profile/07234212189847785260noreply@blogger.com0tag:blogger.com,1999:blog-6285832399884645871.post-34485900145177024122007-07-09T08:00:00.000+01:002007-12-23T10:31:53.292+00:00Consensus and dissentIpsos MORI reports that 56% of British adults agree with the statement "Many leading experts still question if human activity is contributing to climate change", and suggests that people have been "influenced by counter-arguments". Al Gore, who helped to organise last week's Live Earth event, remarked that "those people think, wrongly, that the scientific debate is still raging." The Royal Herakliteshttp://www.blogger.com/profile/07234212189847785260noreply@blogger.com1tag:blogger.com,1999:blog-6285832399884645871.post-70120492131588813292007-07-02T09:00:00.000+01:002007-12-23T10:30:59.935+00:00No smokingSmoking is now illegal in the UK in all indoor locations that are open to the public. Controversially, this includes private establishments where the counter-argument exists that a non-smoker could frequent another establishment if they minded enough.The logic for tolerating the smoking ban seems to proceed as follows.1) Most people now believe that smoking cigarettes is equivalent to taking a Herakliteshttp://www.blogger.com/profile/07234212189847785260noreply@blogger.com4tag:blogger.com,1999:blog-6285832399884645871.post-9736624956640977912007-06-25T08:00:00.000+01:002007-08-31T11:40:06.319+01:00Inheritance (2)Is it fair for a person’s chances in life to be affected by the receipt of a capital sum from another individual? We could ask the same question about innate ability: is it fair for a person to have a better chance of a high income because of genetic characteristic they did nothing to deserve? It has been argued that it is not. Of course, it is harder to stop people benefiting from their Herakliteshttp://www.blogger.com/profile/07234212189847785260noreply@blogger.com2tag:blogger.com,1999:blog-6285832399884645871.post-34041927628127829082007-06-18T08:36:00.000+01:002007-08-31T11:40:06.319+01:00Inheritance (1)The phenomenon of wealth that is acquired from a relative appears to have few sympathisers. Even pro-market supporters often have little time for it. Socialists tend to be scathing about it. Anthony Giddens, for example, argues that inherited capital "violates reciprocity”. The recent e-petition against inheritance tax argued it was “double taxation”, but provided no economic arguments in favour Herakliteshttp://www.blogger.com/profile/07234212189847785260noreply@blogger.com1tag:blogger.com,1999:blog-6285832399884645871.post-54009630198667330242007-06-11T08:00:00.000+01:002007-08-31T11:40:06.319+01:00AbortionThere is some concern over the level of abortions in this country. Three years ago a report showed that over 20 per cent of pregnancies are being terminated. Recently there have been plans to lower the current time limit from 24 weeks, possibly to 20.Abortion is an extremely emotive topic. A person's attitudes to it are often said to depend on his or her "value system". As with most emotive Herakliteshttp://www.blogger.com/profile/07234212189847785260noreply@blogger.com0tag:blogger.com,1999:blog-6285832399884645871.post-31563210148629631792007-06-04T08:00:00.000+01:002007-12-23T10:31:43.637+00:00LocalismAn issue closely related to transparency is that of democratic participation. It has often been argued that voters need to become more involved in deciding issues which matter to them. This philosophy is behind the recent trend for more consultations.There is also a movement to make democracy more devolved, and allow for more voting about local issues at a local level, which is currently Herakliteshttp://www.blogger.com/profile/07234212189847785260noreply@blogger.com5tag:blogger.com,1999:blog-6285832399884645871.post-18186986780624800302007-05-28T08:00:00.001+01:002007-12-23T10:31:43.637+00:00TransparencyGordon Brown will shortly become Britain's unelected premier. He has promised to introduce more "transparency" into government. Concepts such as transparency and opennness were also popular with the current incumbent Tony Blair. The present administration introduced the Freedom of Information Act, intended to make information about government activities more accessible to ordinary people. The Herakliteshttp://www.blogger.com/profile/07234212189847785260noreply@blogger.com2tag:blogger.com,1999:blog-6285832399884645871.post-54252406463199216402007-05-21T16:00:00.000+01:002007-12-23T10:30:59.937+00:00Genes and opportunityMost people would agree that one of the key political issues is this:How can talented children from poor backgrounds have the same opportunity as those from wealthier backgrounds?To assess where we are in terms of this goal, we can look at data on social mobility. The problem is, the data can only be interpreted in conjunction with data about heritability of talent.Say, for the sake of argument, Herakliteshttp://www.blogger.com/profile/07234212189847785260noreply@blogger.com8