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Sunday, 1 May 2016

Unit 2 & 4: Revision videos on all aspect of inflation

Thanks to Geoff and the team at tutor2u for these helpful revision videos on inflation. Excellent for unit 2 and 4.

 1. How inflation is measured.

 

 2. Causes of inflation

 

3. Very short video on the internal & external causes of inflation

 

 4. Consequences of inflation

 

Saturday, 30 April 2016

Unit 4: Trump and Sanders agree on trade!

It is very interesting to hear that both Donald Trump and Bernie Sanders, two very different political beasts, are both anti the TPP.

This article helps explain why. Really useful for question on the pros and cons of free trade, a common question in Unit 4.

Wednesday, 27 April 2016

Unit 2 & 4: Supply Side Economics

Unit 3: Monopoly power in the UAE

Thank you to Simon Wakerley for this excellent article on monopoly power in our region. An example that you guys will be able to easily relate to.
We often champion monopolies for their dynamically efficient behaviour, and how they contribute to long run static efficiencies through their invention and innovation made affordable by high profits.
Image by Chickenonline for Pixabay
Google in particular took a hit of $802 million in its recent results due to its investment in driverless cars and internet wearables such as Google Glass, which it describes as "moon shots"
The ability of dynamic capitalist economies to "creatively destruct" existing technologies is often cited as a compelling argument to not fear the power ofmonopolies.
If an monopolist enters a staid phase it’s likely new innovators will rise up and seize its crown. It’s this pressure that keeps a monopolist "pushing the envelope" in our societies – just like Google.
This is clearly good for growth and standards of living.
However, academics and policy makers do fear the monopolist who, after an exciting and dynamic period, will become staid and defensive.
Tim Wu, a lecturer at Columbia Law school, wrote an excellent book on economic history in which he highlighted how the behaviour of past monopolists, eg AT&T and telecoms, can become defensive and actually stifle innovation.
Wu cites the case of the answerphone machine, which AT&T suppressed for many decades.
I was reminded of his interesting thesis when considering the behaviour of the UAE’s telecoms industry.
Here in Abu Dhabi we have a duopoly with large incumbent firms Etisilat and Du sharing the market.
They both represent a private-public partnership as the UAE government holds a majority stake in both organisations – with between 40% and 20% listed on the UAE stock exchange, respectively.
It's interesting how defensive these organisations are being by limiting the use of voice over the internet (VoIP) technologies in the UAE and Morocco. 
Calls for them to open up access to VoIP for applications such as Facebook, SnapChat, FaceTime, etc. have been unsuccessful – the incumbents seem reluctant to give up their monopoly power.
This action forms a good example of an artificial barrier to entry. The huge incumbents are unwilling to give "piggy back" access of new entrants to VoIP without their permission – they are effectively stopping new "destructive" technologies, freely available elsewhere, from entering the UAE and Moroccan telecoms market.
Meanwhile domestic and foreign owned firms, as well as consumers based in the UAE, have to suffer higher costs than their competitors and consumers overseas.
Interestingly, Morocco is experiencing the issue due to Etisilat owning a controlling stake in their telecoms operator.
This also highlights an issue with privatisation of former state-owned utilities falling into the control of foreign shareholders.
Ultimately, these artificial barriers to entry will cause a loss of efficiency and competitiveness to both the UAE and Moroccan economies. They are also a very good example of the fact that high prices and reduced output can’t always be defended by their ability to innovate.

Monday, 25 April 2016

All Units: A set of revision videos from Tutor2U

Click here to access a set of 50+ revision videos covering all aspects of the AS and A2 course.

Unit 3: Contestable markets and the cloud!

A terrific short article here looking at how the development of cloud computing
has enabled small firms to compete to a greater degree.
The issue is that the falling cost of computing has reduced barriers to entry 
and made markets more contestable, all of which enhances efficiency
and increases consumer choice. Savvy small businesses are 
cutting costs by using the cloud for web hosting, social media marketing,
inventory management and accounting. Excellent application for question about 
small businesses competing in a larger market.