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Economics

Net Neutrality does not make the Internet fair

Posted in Economics, Geek, Tech Industry on April 25th, 2014 by leodirac – Comments Off on Net Neutrality does not make the Internet fair

A lot of people are concerned that the FCC will “destroy the Internet” (or something similarly hyperbolic) by loosening so-called net neutrality rules.  But the fact is that today’s system is actually a lot less stable than you realize, and legislating net neutrality would actually make it even more precarious. That traffic moves in a “fair” way across […]

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Google+ and Facebook’s natural monopoly in social networks

Posted in Analysis, Economics, Facebook, Google, Microsoft, Tech Industry on July 17th, 2011 by leodirac – 2 Comments

Natural monopolies occur when it is economically favorable to have a single standard vendor for a product or service. In these situations, monopolies tend to appear and maintain themselves naturally. When I say “economically favorable” I mean in the aggregate — the entire economy operates more efficiently because of the standard. Which is unusual with […]

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Apple and Wal-Mart: Bargaining on your behalf for lower prices

Posted in Analysis, Apple, Business, Economics, Gadgets, Geek on April 20th, 2010 by leodirac – 1 Comment

Even though Apple products are expensive, there’s a surprising similarity between Apple and Wal-Mart: both companies push hard on other parts of the value chain to deliver lower prices for consumers. In Walmart’s case, it’s generally suppliers who get squeezed.  Walmart demands that manufacturers of goods produce them at the lowest possible price so that Walmart can […]

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2009: A Year of Commitments

Posted in Community, Economics, Ego, Personal Growth on December 17th, 2009 by leodirac – 1 Comment

As the year wraps up, I’d like to share some of the major events that have happened in my life recently. Many of my readers will be well aware of these events, but I recognize that personal news travels through a variety of channels, and all of those channels are unreliable. (I’ll save the diatribe on why Facebook is a horrible way to keep up with friends for another day.) For readers who are looking for insightful analysis of technology, my apologies. Note the “ego” tag. This is a personal update but does contain a little insight into real-estate finance….

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UAW vs. Chrysler: friends at last!

Posted in Analysis, Business, Economics on May 20th, 2009 by leodirac – 1 Comment

I’d like to share a couple thoughts on Detroit — a couple ideas that I’m not hearing in the popular or business press, but are important to understand. Chrysler goes bankrupt First some background. Chrysler is being restructured under bankruptcy. This doesn’t mean they’re going out of business. It means that they owe more money than they have or will be able to pay. So with the help of a judge, they’re sitting down with everybody they owe money to and telling them frankly “you’re not getting everything we owe you. Sorry, but there just isn’t enough to go around.”…

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Some feedback to Financial Reporters

Posted in Economics on March 1st, 2009 by leodirac – Comments Off on Some feedback to Financial Reporters

I’m sure you know the US economy is in recession, which means the total amount of economic activity is declining. Last week you might have heard the official numbers on how fast it’s declining. The big story was that the economy is down 6.2%, and everybody agrees that’s a lot. Most everybody agrees on what it was that shrank — the GDP, or Gross Domestic Product, which is a strictly defined measure that attempts to sum up all economic activity within the country’s borders. But subtle differences in wording make it really unclear on actually how fast the economy was…

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Why Evolution Runs Backwards in the Refrigerator

Posted in Analysis, Cooking, Economics, Evolution, Humor on July 19th, 2008 by leodirac – 4 Comments

Evolution-like processes exist in many places beyond genetic adaptation of biological species. We see similar processes in a great many aspects of modern life, generally running many orders of magnitude faster. Much of economics and business is governed by processes that select for the most successful product or business model or manufacturing process or organizational structure. Successful practices thrive and out-compete ones which are less effective at meeting human needs and desires. Warfare has very obvious parallels. In computer science, user interfaces, programming languages and system architectures all evolve by analogous processes. Similar effects can be found in governments, religions,…

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The Microhoo! deal is all about network effects

Posted in Analysis, Business, Economics, Google, Microsoft, Yahoo on February 4th, 2008 by leodirac – Comments Off on The Microhoo! deal is all about network effects

Although most corporate mergers fail (often due to mis-aligned incentives on the part of the deal-makers) there is a solid economic foundation for the proposed Microsoft + Yahoo! merger. Most of their assets will work no better combined than separate. But the merged Microhoo ad network would be significantly more valuable than the sum of two ad networks alone. Why bigger is better for online advertisers The reason lies in network effects of the online search + advertising industry. Imagine you’re an ad buyer which is to say you have a service you want consumers to find online. Unless you’re…

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Economics of Personal Time

Posted in Economics, Personal Growth on October 10th, 2007 by leodirac – 7 Comments

Please excuse a bit of rambling, but I’ve got a seedling of an idea I’d like to publicly explore. The classic definition of economics concerns the allocation of finite resources to unlimited desires. Resources here are physical goods and services that people buy or trade. There’s only so much stuff in the world that people might want. If you add up what everybody wants, it’s more than the amount of stuff available to go around — classically it’s infinite. Economic systems manage this discrepancy. I increasingly find myself facing a related problem: trying to allocate my finite time to seemingly…

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Risk vs. Reward: Expectation Value of Utility

Posted in Analysis, Business, Economics on October 1st, 2007 by leodirac – 3 Comments

I’m going to try applying some economic theory to a classic career decision. Imagine that you must choose between two possible jobs, let’s call them “Big Company” and “Startup.” Big Company will pay you $100k per year. Startup can only pay you $50k per year, but with a 10% chance of paying you a $3 million bonus in 3 years. Which one do you take? I’ll present an analytical economic framework for making this decision which shows why this decision is ultimately very personal. For the purposes of this discussion, I’m going to ignore the time value of money –…

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