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Scooped by Graham Watson
onto Microeconomics: IB Economics

April 20, 2018 10:07 AM

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From www.bbc.co.uk - April 20, 2018 10:04 AM

Graham Watson's insight:

And still they come: the drip, drip of energy companies raising their prices, trying to imply that there's no form of collusion whatsoever between them.

This time, it is Scottish Power's turn to increase prices - after EDF and British Gas. Of course, the companies will all say that price increases represent changing cost conditions alone. But as good economists, you might have other explanations of firm behaviour in this oligopolistic market.

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Economy

Microeconomics: IB Economics

A brief overview of relevant articles for IB, A-Level and Pre-U economists relating to microeconomic issues

Curated by Graham Watson

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Scooped by Graham Watson

Today, 6:03 AM

Scoop.it!

From www.bbc.co.uk - February 26, 7:03 PM

Graham Watson's insight:

What type of good is public wi-fi access? Is it a free good? Or is it a common access resource, and thus although non-excludable it's also non-rivalrous? And if you do choose to see it as the former, to what extent does giving wherever you login with some access to your data mean that it's no longer free?

This interesting article highlights its ubiquity, and the public expectation that they should have it at football and music festival, but also the costs involved and the fact that, fundamentally, it is quite often more rivalrous than you would think.

mr distro's curator insight, Today, 2:26 PM

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February 26, 4:23 PM

Scoop.it!

From www.theguardian.com - February 26, 12:55 PM

Graham Watson's insight:

You'd almost think I give this board some thought: I set you up, and Nils Pratley brings it home.

His article for tomorrow's Guardian makes the case for why the government should subsidize RollsRoyce given the apparent profitability of the company. In the first place, all economies subsidize aviation, so not to do so would probably just see it relocate; secondly, it is challenging the government to substantiate its "modern" industrial strategy. Were it not to do so, it might signal to other firms that such a pledge is largely rhetorical and that if they want to invest in new, innovative technologies they're better looking elsewhere and that's not a good look.

mr distro's curator insight, Today, 2:29 PM

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February 26, 2:12 AM

Scoop.it!

From www.bbc.co.uk - February 25, 7:02 PM

Graham Watson's insight:

The competition for staff among grocery retailers is hotting up with Aldi announcing a second pay rise for staff this year in response to Lidl GB, Waitrose and Sainsbury's announcing above-inflation pay rises for staff this month.

This illustrates two things: the competitive nature of the market, and the role that shop floor staff play in consumer perceptions of the stores, and the oligopolistic nature of the market, with firms effectively shadowing one another's behaviour. And in the former case, you might wonder whether there's a case for suggesting that the pay of shop floor workers is too low relative to that of the CEOs; I know that my shopping experience at a supermarket is much more dependent upon the individual exchanges with staff than the decisions of a CEO.

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February 25, 3:31 AM

Scoop.it!

From www.bbc.co.uk - February 24, 7:01 PM

Graham Watson's insight:

Paramount have increased their bid for Warner Brothers, by $1 per share, and are quietly confident that this might convince the latter to abandon the deal they've already struck with Netflix. We are entering the territory of the winner's curse, where irrespective of who wins and completes a deal is going to be a loser long-term, having paid too much to merge.

We shall see how Warner Brothers will react...

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February 24, 10:37 AM

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From www.theguardian.com - February 24, 4:47 AM

Graham Watson's insight:

Basics. D&S. Oil prices. Geopolitics.

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February 19, 5:29 AM

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The Guardian view on Scotland’s housing crisis: supply has failed to keep pace with need | Editorial | The Guardian | Microeconomics: IB Economics | Scoop.it

From www.theguardian.com - February 18, 1:25 PM

Graham Watson's insight:

This Guardian editorial highlights the very real costs of Scotland's housing shortage noting that a lack of affordable homes, and has contributed to a 106% rise in rough sleeping. It advocates the Viennese model and an expansion of public housing provision which would help tackle this and stabilize rents.

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February 18, 3:37 AM

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From www.bbc.co.uk - February 18, 2:26 AM

Graham Watson's insight:

The government are poised to postpone a proposed move to equalise the minimum wage such that 18 to 20 year olds get the same pay as those aged 21 or older. As the article notes "Under existing rules, people aged over 21 must be paid £12.21 an hour, with a lower rate of £10 in place for 18 to 20-year-olds."

However, youth unemployment remains problematic, with 16.1% of people aged 16 to 24 unemployed compared to a national average of 5.1%, and the fear is that raising the minimum wage would disincentivise employers from taking on the young who they're going to have to train, and who, on average, will have less human capital.

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February 15, 8:13 AM

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From www.bbc.co.uk - February 15, 6:54 AM

Graham Watson's insight:

The Trades Union Congress have revealed that their research suggests that the gender pay gap is closing, albeit at a glacial rate. At the present rate of progress, it's going to take 30 years for the gap to disappear, although it varies from sector to sector, with the greatest inequality in financial services.

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February 13, 2:19 AM

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From www.bbc.co.uk - February 12, 1:46 PM

Graham Watson's insight:

A bad day for the environment, with President Trump rolling back environmental protections governing greenhouse gas emissions and having wider implications for climate change. According to the President they will "make cars cheaper, bringing down costs for automakers by $2,400 per vehicle".

Which is ironic, because his tariffs have probably been responsible for at least that size increase in the prices paid by every American households for goods.

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February 12, 2:10 AM

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From www.bbc.co.uk - February 11, 7:04 PM

Graham Watson's insight:

The hospitality sector has called upon the government to scrap its proposals for a holiday tax in England, fearing that any increase in price would reduce quantity demanded and damage the sector.

It's an interesting tax proposal, in that it's one of the first times I've seen a tax proposed to explicitly "raise revenue", in this case for lcoal services.

Would it adversely affect the sector, and to what extent? What concepts would you bring to bear to start analysing this? And is there a difference between a tourist tax in Venice and one in Skegness? Why?

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February 10, 10:37 AM

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From www.bbc.co.uk - February 10, 2:59 AM

Graham Watson's insight:

BP has announced lower profits for the year, down to $7.5bn for the year, from $8.9bn the previous year, in large part due to a 20% fall in the price of oil. (Proof if it were needed that profit-related bonuses in the sector are a bit of a nonsense)

As a result, the oil giant has promised to focus on cost-cutting - i.e. job losses in all probability. And then we get the usual hagiographic praise for a Chief Executive's ability to manage costs: Cornelia Meyer, chief executive of Meyer Resources and a former BP executive, told the BBC that O'Neill had "a stellar track record", and when it comes to reviving BP's fortunes, "if anybody can, she probably can". Because there's no way that anyone else could, justifying the salary.

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February 10, 10:27 AM

Scoop.it!

From www.bbc.co.uk - February 10, 7:28 AM

Graham Watson's insight:

The Competition and Markets Authority has announced that Apple and Google have undertaken to change their app stores, in response to claims that they've been running them in a duopolistic fashion, limiting competition and giving preferential treatment to their own apps. However, there are concerns that this is currently the low-hanging fruit, and won't bring about substantive changes in the market. It was thought that previous arrangements acted as a barrier to entry, reduced competition and choice and harmed consumer interests.

Remarkably, for fuddy-duddies like me, the sector is a sizeable one: accounting for around 1.5% of the UK's GDP and supports around 400,000 jobs.

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February 10, 5:04 AM

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From www.theguardian.com - February 9, 5:30 PM

Graham Watson's insight:

The government is pledging £1bn for community energy schemes, I suspect to try and sugar the pill for communities that see renewable projects on the doorstep but don't always perceive their benefits. Good for the environment, some say; less than manifesto pledges, say others.

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Today, 3:27 AM

Scoop.it!

From www.bbc.co.uk - February 26, 6:25 PM

Graham Watson's insight:

It looks like the proposed mega-merger in the entertainment sector has reached its denouement, with Netflix revealing that it has dropped its bid for the streaming services of Warner Bros. As a result, Paramount has a clear field and will look to conclude its deal for the whole business.

It's an interesting case study, with the winner's curse looming large and my other observation is that the withdrawal from the bidding came on the day that one of it's co-CEOs visited the White House. The President has a vested interest in the Paramount bid succeeding, not least because of his relationship with the Ellison family and his vitriol towards CNN, part of the Warner Bros stable.

Equally, such are the ramifications of the deal for the concentration of the sector, that it will also require regulatory approval, something that shouldn't be straightforward...unless. No, let's not go there.

mr distro's curator insight, Today, 2:27 PM

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February 26, 4:18 PM

Scoop.it!

From www.theguardian.com - February 26, 7:53 AM

Graham Watson's insight:

This could easily be another Business Management 'scoop' because it's provoked by Rolls-Royce announcing both record profits and a £9bn share buyback. However, given the apparent riches of the company, is it right that it should also be asking the government for a £100m to £200m subsidy to develop a smaller commercial engine for short-haul jets?

mr distro's curator insight, Today, 2:30 PM

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February 25, 3:35 AM

Scoop.it!

From www.theguardian.com - February 24, 2:07 PM

Graham Watson's insight:

The Chief Economist of the Bank of England, Huw Pill, has weighed into current labour debates suggesting that recent tax changes, notably the increase in National Insurance, and the rising minimum wage have increased youth unemployment.

He's right, I suspect, both about the causes and the significant cost of youth unemployment being around 16.1%

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February 25, 3:27 AM

Scoop.it!

From www.bbc.co.uk - February 24, 7:04 PM

Graham Watson's insight:

Good news for households with OFGEM announcing that its latest review of energy prices, will see the Energy Price Guarantee ensure that prices are going to fall by 7%, or £117 per year for the average household. However, they are still £500 higher than prior to the Ukraine war.

This is a good article is breaking down the distributional effects of this and noting that households who consume the most electricity will benefit the most as well as showing you the composition of energy prices.

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February 24, 5:29 AM

Scoop.it!

From www.bbc.co.uk - February 24, 1:01 AM

Graham Watson's insight:

An interesting snapshot of the labour market, with the number of people on zero-hours contracts reaching 1.23 million, having risen by over 180,000 since Labour were elected and despite a manifesto pledge to get rid of the practice.

It's argued that such contracts are fundamentally exploitative, and offer little job security and no guaranteed income, but, of course, employers love them because they reduce their costs.

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February 18, 4:08 AM

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Training more Britons may not cut net migration or plug skills shortages, study finds | Immigration and asylum | The Guardian | Microeconomics: IB Economics | Scoop.it

From www.theguardian.com - February 17, 7:01 PM

Graham Watson's insight:

Despite skills shortages, and the government's apparent determination to train local workers to fill jobs in sectors such as social care, it seems that the market isn't operating efficiently in resolving this, with potential workers not being attracted by the pay and conditions in shortage sectors.

Traditionally, economic theory has worked on the basis that wages would rise, not least to offset the perceived 'unattractiveness' of a particular job. However, this doesn't seem to be the case, so why might workers not be keen to accept such jobs? Free market economist will argue that it's because benefits are too generous, but from my perspective, the expectations of workers have changed, and people are more reluctant to just accept any job, something that I suspect was less prevalent 30 years ago.

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February 16, 3:19 AM

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Rural drivers to face steepest bills under UK’s mileage-based electric vehicle tax | Electric, hybrid and low-emission cars | The Guardian | Microeconomics: IB Economics | Scoop.it

From www.theguardian.com - February 16, 2:13 AM

Graham Watson's insight:

Given falling tax revenues from fuel duty, the introduction of a mileage based vehicle tax is inevitable. This Guardian article focuses on the implications of the tax for electric cars, and notes that rural drivers are going to be paying the steepest bills, with motorists in the South West potentially paying nearly four times the amount that Londoners will.

However, paying a fixed sum per mile travelled is still fairer in my eyes than many of the alternatives.

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February 14, 5:29 AM

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From www.theguardian.com - February 13, 8:46 AM

Graham Watson's insight:

It seems as though bankers' pay is recovering - the poor things must be struggling on their previously insubstantial offerings - and it gives us a chance to reflect on labour market theory. According to labour market theory, bankers' pay reflects their marginal productivity, or more correctly their marginal revenue product (MRPL).

However, I would argue that the labour market for chief executives is imperfectly competitive, and I would go further and suggest that it's also characterised by cartel-like behaviour.

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February 12, 7:41 AM

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From www.bbc.co.uk - February 11, 7:00 PM

Graham Watson's insight:

This BBC article looks at something I've not 'scooped' for a while, the nature of the working week. In this case, it looks at Dutch labour markets, where a 4 day week is far more common.

However, whereas the majority of workers seem to think that it's a good thing and that it's increased their productivity, the empirical evidence is more mixed, and the nature of the Dutch tax system might also have contributed to the 4 day week being an attractive option.

It might have increased worker retentions and lowered recruitment costs for some firms but the overall impact of it on the Dutch economy is less clearcut.

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February 11, 9:39 AM

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From www.theguardian.com - February 11, 7:42 AM

Graham Watson's insight:

A lovely example of derived demand in a labour market. The demand for people working in brewing is derived from the demand for beer, and, as the article implies if people are drinking less beer, then fewer people are required to make, market and distribute it.

(As a bonus, there's even a lovely example of the difference between less and fewer that escapes most pupils these days!)

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February 10, 10:33 AM

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From www.bbc.co.uk - February 10, 6:53 AM

Graham Watson's insight:

The first shots have been fired in the lucrative market for weight-loss drugs with Novo Nordisk suing rival, Hims & Hers, for so-called knock-off versions of Wegovy.

It's interesting because the latter product is compounded, and not subject to the same regulation as the branded version of the drug, and the Food and Drug Administration has intervened to "safeguard consumers from drugs for which the FDA cannot verify quality, safety, or efficacy", effectively erecting an artificial barrier to entry to the market.

Whilst the protection of intellectual property is an important feature of free markets, it can come at a higher cost and lower choice for consumers, and going forward Novo Nordisk is acutely aware that its patents are starting to run out in this area.

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February 10, 5:07 AM

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From www.theguardian.com - February 10, 3:30 AM

Graham Watson's insight:

The costs of environmentally-friendly energy are laid bare in the £700m cost of the 'fish disco' designed to deter fish from entering the inflow pipes of the new Hinkley Point C nuclear power stations. Estimated suggest it will save 44 tonnes of fish life per year, and represents 1.5% of the total cost of the nuclear power station; but one wonders what the cost per fish is, given the 25 year life of the plant's subsidy contract.

AlexPagalle's curator insight, February 10, 9:40 AM

think it's neat

Microeconomics: IB Economics

Why you can't get a signal at festivals and sports matches

Subsidies for Rolls-Royce might seem a bit rich, but they are inevitable | Nils Pratley | The Guardian

Aldi to raise wages for second time this year

Paramount boosts Warner Bros offer to rival Netflix in takeover bid

Oil prices hit seven-month highs as tensions rise before US-Iran talks | Oil | The Guardian

The Guardian view on Scotland’s housing crisis: supply has failed to keep pace with need | Editorial | The Guardian

Plan to increase youth minimum wage could be delayed

Gender pay gap won't close until 2056, warns union

Trump revokes landmark ruling that greenhouse gases endanger public health

Scrap proposals for England holiday tax, hospitality bosses urge

BP steps up cost cutting as profits slide

Apple and Google agree to change app stores after 'effective duopoly' claim

Miliband pledges up to £1bn for community green energy schemes | Renewable energy | The Guardian

Netflix drops Warner Bros bid, clearing way for Paramount takeover

Rolls-Royce boss pushes for UK taxpayer support for new jet engine | Rolls-Royce | The Guardian

Young bearing the brunt of UK tax and wage changes, says BoE economist | Youth unemployment | The Guardian

Energy bills to fall in April in price cap change and charges shake-up

Number of workers on zero-hours contracts hits record high

Training more Britons may not cut net migration or plug skills shortages, study finds | Immigration and asylum | The Guardian

Rural drivers to face steepest bills under UK’s mileage-based electric vehicle tax | Electric, hybrid and low-emission cars | The Guardian

Bank bosses get huge pay rises in sign top City salaries back to pre-crash highs | NatWest Group | The Guardian

The Dutch love four-day working weeks, but are they sustainable?

Heineken to cut 6,000 jobs as people drink less beer | Food & drink industry | The Guardian

Wegovy maker Novo Nordisk sues rival over 'knock-off' weight-loss drugs

£700m ‘fish disco’ plan could save 90% of marine life, says Hinkley Point C study | Hinkley Point C | The Guardian