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Scooped by
Graham Watson
onto Microeconomics: IB Economics September 2, 2024 1:07 PM
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The new government must use its landslide majority to mend the damage to jobs and fish populations caused by neglect
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Young adults are drinking less, so the likes of Nick Mackenzie are having to expand the appeal of pubs.
Graham Watson's insight:
This article, featuring an interview with the head of pub chain, Greene King, Nick Mackenzie, highlights how there's been a change in consumer tastes that's impacted the sector. He names cafes and delivery apps as competitors for more traditional pubs, and this has implications for the both the level and price elasticity of demand for pub bought drinks. A nice little starter for Year 12 economists looking at demand theory.
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Analysis of 800,000 European cars found real-world pollution from plug-in hybrids nearly five times greater than lab tests
Graham Watson's insight:
It seems as though plug-in hybrid vehicles are nearly as polluting as petrol cars - suggesting that lab tests don't accurately capture pollution levels - and that consumers face imperfect information in the market. And we all know what that means - sub-optimal decisions not reflecting social costs, and negative externalities.
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Consumers and corporates should welcome CMA proposals to overhaul regulations unchanged since the 1960s
Graham Watson's insight:
Nils Pratley praises the intervention of the Competition and Markets Authority (CMA) in seeking transparency in pricing of veterinary services, arguing that they've exploited the consumer over the past five years and been able to make supernormal profit as a result.
And as a little aside, a word to the wise: be wary of businesses that have been heavily invested in by private equity groups. They're no fools, and, in my experience, only motivated by profit, so the fact there such concentration in the market might have been seen as indicative that this sort of abuse of a dominant position was likely.
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Pet owners are often unaware of prices, or not given estimates, the competiton watchdog finds.
Graham Watson's insight:
The seemingly caring world of the vet is in the crosshairs of the Competition and Markets Authority (CMA) who have published an provisional list of recommendations for the sector designed to increase price transparency and reduce the potential abuse of market power.
These include being forced to publish the price of treatments, a price comparison website, having to reveal whether a practice is a part of a larger group or not.
Vets will have a month to respond before the final recommendations are drawn up.
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Explore the Guardian’s tracker to see which operators are nationalised and if services are improving under public ownership
Graham Watson's insight:
This interactive piece in the Guardian looks at the effects of renationalisation on the UK's rail network, and attempts to quantify whether this has improved the standard of service. The overview is that many people think that a publicly-owned railway has the capacity to be better organised, but there's a mixed picture if you look at delays and cancellations on the new renationalised arms of the service.
It's well worth a read!
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The regulator has given it "strategic market status", opening the door to what it calls "proportionate interventions."
Graham Watson's insight:
It seems as though the Competition and Markets Authority (CMA) is going to ask Google to alter its search engine in the UK in the hope of increasing consumer choice in the market. The company has been given ""strategic market status", implying that it's establish a dominant position that isn't in consumer interests.
Of course, this is denied by the firm, which has argued that "Google Search contributes billions of pounds a year to the UK economy — £118 billion in 2023 alone" and that "Many of the ideas for interventions that have been raised in this process would inhibit UK innovation and growth, potentially slowing product launches at a time of profound AI-based innovation."
It's that perennial issue: to what extent do dominant firms gain that position because they're the most efficient and most innovative, or, is it the case that once they establish this position they are likely to erect artificial barriers to entry.
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Exclusive: Government failure to close loophole allows 600,000 tonnes to be shipped elsewhere each year
Graham Watson's insight:
This rather follows on from yesterday's story about the UK exporting plastic; it seems that this, and cheap plastic prices, has been responsible for a number of plastic recycling centres closing in the past two years. As the Managing Director of Biffa Polymers suggests, not only is this an economic issue, it also has ethical implications.
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Experts call for urgent strategy to end overfishing as report shows just 41% of stocks of species such as cod and mackerel considered healthy
Graham Watson's insight:
One of the few supposed benefits of Brexit was supposed to be the ability to regulate our own industries as we choose, and yet the evidence from the latest data suggests that we are continuing to overfish British waters, with stocks of cod and mackerel among the stocks that are over-exploited.
This is a classic example of the Tragedy of the Commons, and yet we should have greater control over this, now that we are out of the EU and the co-ordination costs associated with government policy should have fallen too. It seems as though we haven't taken the opportunity.
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Worsening droughts and floods have destroyed wheat for 4bn loaves of bread and forced record levels of imports
Graham Watson's insight:
This article prompts a number of responses - from a simple D&S perspective it suggests that extreme weather events mean that the price of food is higher than would otherwise be the case. However, perhaps a more pressing concern is the food waste implications of this.
Food production and consumption are notoriously wasteful - food waste is generated in both production and consumption and anything that reduces the amount of food waste - assuming that the marginal cost of the intervention is less than the marginal benefit - would clearly be a good thing.
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Renewable energy overtook coal as the world's leading source of electricity in the first half of this year - a historic first, according to new data from the global energy think tank Ember. Electricity demand has grown around the world but the growth in solar and wind was so strong it met 100% of the extra electricity demand.
However, Ember said the headlines mask a mixed global picture. Developing countries, especially China, led the clean energy charge but richer nations including the US and EU relied more than before on planet-warming fossil fuels for electricity generation.
Graham Watson's insight:
This BBC clip accompanies the earlier article looking at the rise of renewables, not least in developing economies, although fast growth of demand for electricity in the developed world has meant that there's become even more dependence on fossil fuels than previously.
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The Shenzhen-based electric car maker says the UK is now its biggest market outside China.
Graham Watson's insight:
"The Chinese are coming!" to paraphrase Colin Welland. One for the kids there....
However, Chinese EV manufacturer BYD has seen sales in the UK leap by nearly 900%, with over 11.000 cars sold last month and 100 dealerships in the UK, making it the company's second largest market after China.
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CMA poised to give verdict after appeal by five firms for permission to increase bills higher than allowed by Ofwat
Graham Watson's insight:
Interesting times in the water sector, with the regulator, OFGEM, due to rule on whether or not five water companies - Anglian, Northumbrian, Southern, Wessex and South East - can increase their bills by more than the regulator initially proposed.
It's fascinating because they are going to argue that in order to fund much needed investment, the proposed price increases are too small, and you can see that this may well be true. However, in the context of the post-privatisation era, you might also argue that previous mismanagement of the companies has brought us to this point; the difficulty though is that the companies can't act retrospectively.
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Exclusive: Differences over changes to environmental and legal provisions to prompt economic growth hint at chaos at heart of government
Graham Watson's insight:
It seems to be the case that the government are going to relax planning restrictions in the hope of kickstarting housebuilding. However, there's still disagreement about how far to go in changing legislation. Either way, it seems that the endless trade-off between economic growth and environment is going to be debated again in relation to the housing market. |
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The cereal-maker's new boss says he wants to instil a "performance mindset" and prioritise earnings.
Graham Watson's insight:
Year 13 economists looking at costs and revenues and market structures might want to think about how they'd model this. Are these costs going to be fixed or variable costs? Or a mixture of both?
If so, are they going to alter equilibrium price and output? If so, how...
Happy diagram drawing.
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Homes asked to use less electricity as network is overloaded by the rush to wind and solar power.
Graham Watson's insight:
The Netherlands green transition should be a good thing, right? I mean the economy has the largest per capita take up of solar panels and an enthusiastic adopter of electric vehicles.
The problem is that this has placed increased strain on the electricity network, which is designed to distribute power from centrally-located big power stations, rather than peripheral power sources. As a result, there's grid congestion, energy security is being imperilled and energy prices driven up, potentially damaging the competitiveness of energy-intensive industry.
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Bloc’s first affordable housing plan to cover issues such as tenants’ rights, property speculation and tourist lets
Graham Watson's insight:
The EU is looking to regulate the short-term rental sector in the hope of resolving Europe's ongoing housing shortage. The problem is that the best of intentions don't always translate into successful policy implementation.
It will be interesting to see what's proposed: price ceilings are destined to fail and tighter regulation is likely to see people move out of the private rental sector, and lower maintenance of these properties.
It's all veery well having the best of intentions but "fine words butter no parsnips".
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It is the third-largest fine the communications watchdog has ever issued.
Graham Watson's insight:
Standard regulatory fare, albeit accompanied by a sizeable fine, with OFCOM fining the Royal Mail £21m for failing to hit its delivery targets. As the article states: "It delivered 77% of First Class mail and 92.5% of Second Class mail on time in the 2024/25 financial year, which was short of its 93% and 98.5% targets."
For those interested, the fine gets paid to HM Treasury, but I don't think it will change the Budget...
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Greater Anglia describes renationalisation as a step towards a "simpler, more unified" rail network.
Graham Watson's insight:
The renationalisation of the rail network continues with Greater Anglia passing into state hands as the franchise reverts back to state control and, ultimately, the creation of Great British Railways.
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Chocolate prices will be spiking this Halloween as cocoa costs have more than doubled since early 2024, driven by West African crop failures, tariffs, and global supply shortages, according to Wells Fargo’s Agri-Food Institute.
Graham Watson's insight:
This might make a nice little starter activity: how many Economic concepts can you find in this 1 minute Reuters clip detailing why this year's Halloween chocolate is likely to be more expensive than last year's.
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Competition watchdog agrees requests from Anglian, Northumbrian, Southern, Wessex and South East to raise household bills
Graham Watson's insight:
As flagged yesterday, a number of water companies asked for an independent assessment of the amount they're permitted to increase bills by, arguing that the proposed level didn't allow for the necessary level of essential infrastructure investment.
It seems that the independent panel agreed with this although not to the extent that the companies would have liked. As a result, "The (CMA) decided provisionally to let the companies collectively charge customers an extra £556m over the next five years" - albeit that's only around 20% of what the companies wanted.
The classic compromise - a solution that satisfies no-one. Consumers face higher bills, and the water companies don't get the increased revenues that they were after.
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UK ministers preparing to raise payments to end standoff with pharma industry, cited as reason for firms axing British investments
Graham Watson's insight:
It seems as though drug companies have the stronger hand, with the news that the UK government appears to be willing to increase the amount that thew NHS pays for medicines, with a 25% increase expected.
It will bring the UK more into line with the rest of Europe, if not the US, and might unlock investment in big pharma in the UK which has been postponed in the wake of this row.
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US government shutdown and uncertainty about the economy has caused a surge in value of precious metal
Graham Watson's insight:
D&S and gold. Gold as a store of value, a safe haven.
Basics, really.
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Developing countries lead the historic clean energy charge but the US and EU rely more on fossil fuels than before, a think tank study shows.
Graham Watson's insight:
Is this an inflection point for the global economy - with renewable energy overtaking fossil fuels as the world's largest source of energy. However, it is interesting to note that, according to Ember, it's developing economies are leading the way, with the US and the EU more reliant on fossil fuels. Of course, President Trump's insistence on the 'con' of climate change and desire to use fossil fuels including coal, isn't going to do anything to improve this, but, overall, reasons to be hopeful.
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Under new proposals, sellers and estate agents will have to provide key information about a property up front.
Graham Watson's insight:
The government is looking at ways of making it easier to buy a house, with sellers and estate agents obliged to provide more information about the house, improving information and lowering the cost of buying a house.
The hope is that it will make the housing market more efficient.
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As well as embracing ‘beautiful coal’, the president has set about obliterating clean energy projects
Graham Watson's insight:
And, unsurprisingly, as well as falling behind in the market for electric cars, the US is falling behind in all sorts of other ways in relation to renewable energy and other markets.
It doesn't help that the President is a climate change sceptic, or ignorant to a quite remarkable degree. |
Charles Clover highlights how the UK fishing industry is still at unsustainable levels, in large part because of the 2020 Fisheries Bill which has allowed overfishing and large supertrawler owners to stockpile quota at the expense of smaller inshore vessels.
To add to the difficulties associated with this area, it is intertwined with the issue of Brexit, where management - or mismanagement of Britain's fish stocks was given a prominent role in negotiations.