Revolt of Economics students

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See Teaching Economics after the Crisis.  J-C Trichet: ECB President “As a policy-maker, I felt abandoned by conventional tools.” (2010).

This may be mostly about macro-economics, but reflects fundamental inadequacies in the underlying science that afflict micro-economics and have poisoned fundamental ideas in strategy. Even the most basic tools, such as the PQ demand-curve, are hopelessly unrealistic depictions of real-world mechanisms, and attempts to adapt them end up like trying to squeeze Cinderella’s ugly sisters’ foot into a dainty shoe. Standard economic models do not deal ...

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Why so many Tablet makers?

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This LinkedIn exchange asks why so many new entrants start up in growth industries when it’s obvious that most will fail. Another big case : during 2000-09 Europe added about 12 low-fare airlines – maybe 20 started and 8 failed? No – 60 started and 48 failed!

But I guess the industry dynamics make some kind of sense. In early years, the profit opportunity looks great (early airlines made ...

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Cotton cycles …

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I see (www.cotlook.com) cotton prices have hit a 2½ year high on fears that the Pakistan floods will cut supply – the country produces nearly 7% of world supply. The dynamics of this are pretty easy to lay out, just like many other cyclical industries:

  • The total of industry current capacity [a resource] determines maximum output
  • … which balanced against current demand determines price through normal elasticity mechanisms.
  • If prices rise, so do supplier-profits – and crucially, so do expected profits [an ...
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Industry dynamics: airlines

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Good to be starting a collaboration on this for the textbook 2nd edition with Alexander Zock at European Center for Aviation Development, who is trying to get better understanding of the dynamics of this turbulent industry – from airlines back to airports and aircraft production. [BTW – by industry dynamics we mean rates of start-up, exit, growth, competitive dynamics and implications for activity anbd profitability]. You will find books and articles on this topic [not industry-specific] e.g. Anita McGahan’s Continue Reading →

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