Supply/demand everywhere

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Working  with public officials in Tyumen region of Russia highlighted the still-wider generic nature of the systems that strategy and policy try to design and operate well. Every commercial business serves customers with products or services and do so using capacity of various kinds operated by staff. Customers drive demand (sales and revenue), there may be a cost-of-goods, and capacity + staff drive the supply the business can deliver at some cost.

The surprise in venturing out of the corporate world into other sectors is how universal these relationships are. This first showed up when modelling informal export trade in developing economies – see videos. But now I find they replicate in all kinds of cases …

  • export trade … demand is driven by would-be exporters, products/services provided are the inspection and duty-collection activities, “supply” is driven by capacity (border crossings) operated by border officials … revenue to operate the system comes from duties collected [or can do] and costs by the staff and other operating costs of the crossings
  • national road-network …  demand is driven by would-be travelers (private and haulage), products/services are the journeys made possible by the roads, “supply” is the road-network itself, and that is created and sustained by the equipment and labour who build and maintain the network … which clearly drive the costs of the network, and revenue can come from fuel-duties or tolls [if not just allocated by Govt]
  • disease prevention … [as in Ebola] demand comes from the number of vulnerable and sick people, products/services = the medicines, clinics, vaccination-services and nursing, with supply driven by distribution capacity + clinics, operated by medical staff … which drive costs. Since revenue cannot come from the sick people themselves, it is provided by donors … but that provision is itself often driven by the number of vulnerable and sick people (more people getting sick encourages more donations).
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