I tweeted a piece on this yesterday, but here is the man himself reacting to his award.
The growing policy relevance of insights from microeconomics is captured well in this super entry to Free Exchange on the Economist web site.
Last week Al Roth and Lloyd Shapley were jointly awarded the 2012 Nobel Prize in Economics in large part for their ground-breaking world in how to improve welfare outcomes in exchanges where prices are by-and-large absent - a field of economics that studies Matching Markets. (See you tube clip above)
Tim Harford offers this perspective on the award. (Click here)
The crisis in macroeconomics is discussed in detail in Diane Coyle's new collection of articles "What's the use of Economics?" - I recommend this book to students who are thinking of Economics at university & teaching colleagues, it has important things to say about reforms to what is taught at college and school level in our subject. I will get the library to order a copy.
Tuesday, 23 October 2012
Sunday, 21 October 2012
Unit 4: Economic Development - why aid matters!
Why We Must Stay Committed to Alleviating Poverty
Bill believes that development aid is a small investment that generates huge returns -- not only for poorer countries that receive it but for rapidly growing and wealthier nations as well. In the last 50 years, development aid has saved a billion people from starvation, fostered strong economic growth in countries such as Brazil and Mexico, and expanded markets for the U.S. and other developed countries.
In tough economic times like we’re facing today, some people believe one way to reduce government spending is to cut development aid to poor countries.
But as I’ll point out in my report to G20 leaders, development aid doesn’t just benefit people in poor countries. It benefits us all. Just think about the economic miracles that have occurred over the last couple of decades in countries like China, Brazil, India, Indonesia, Korea, Mexico and Turkey. The people in those countries are largely responsible for the incredible progress that has occurred, and economic aid from wealthier countries played a key supporting role.
And now, these countries – having recently figured out how to reduce poverty and increase their technical capabilities – are in a unique position to work alongside other better-off nations to help the world’s poorest 2 billion people. Over time, this positive cycle of strategic aid will reduce the amount of economic assistance that will be required of wealthier countries. Even more importantly, it enables the worst-off countries to feed, educate, and employ their people, which will lead to greater economic self-sufficiency. And that, in turn, will expand global markets for trade – benefitting all countries, including the U.S.
On the other hand, if wealthier countries cut their contributions to development, people in poor countries will continue to suffer and their economies won’t grow. The world hardly needs more suffering. And poverty does nothing to improve economic and political stability around the world.
The U.S. spends about 1 percent of its total budget on development aid – about the same as many other wealthier countries. As I will say in my report to the G20, that amount of money isn’t causing the fiscal problems in the U.S. or Europe, and cutting back on development assistance isn’t going to solve them.
The fact is, development aid is a small investment that generates huge returns. In the past 50 years, it has played an important role in agricultural advances that have saved a billion people from starvation. Innovations in the development and distribution of vaccines, and health advances, has reduced the number of children under the age of 5 who die each year – from 20 million to fewer than 8 million. This is even more amazing when you consider that the world population has more than doubled in that time.
The G20 countries have a vital role to play in ensuring that development aid is prioritized where it can make the biggest impact, and ensuring that it is used wisely. I believe there are innovative approaches and partnerships that could help accomplish this.
A half-century ago, roughly two-thirds of the world’s population was living in poverty. Today, those numbers have been reversed, due in large part to development aid provided by the U.S. and other wealthy nations. This is great progress, but there is still more we can do to improve basic living conditions for the world’s poorest 2 billion people.
Bill believes that development aid is a small investment that generates huge returns -- not only for poorer countries that receive it but for rapidly growing and wealthier nations as well. In the last 50 years, development aid has saved a billion people from starvation, fostered strong economic growth in countries such as Brazil and Mexico, and expanded markets for the U.S. and other developed countries.
In tough economic times like we’re facing today, some people believe one way to reduce government spending is to cut development aid to poor countries.
But as I’ll point out in my report to G20 leaders, development aid doesn’t just benefit people in poor countries. It benefits us all. Just think about the economic miracles that have occurred over the last couple of decades in countries like China, Brazil, India, Indonesia, Korea, Mexico and Turkey. The people in those countries are largely responsible for the incredible progress that has occurred, and economic aid from wealthier countries played a key supporting role.
And now, these countries – having recently figured out how to reduce poverty and increase their technical capabilities – are in a unique position to work alongside other better-off nations to help the world’s poorest 2 billion people. Over time, this positive cycle of strategic aid will reduce the amount of economic assistance that will be required of wealthier countries. Even more importantly, it enables the worst-off countries to feed, educate, and employ their people, which will lead to greater economic self-sufficiency. And that, in turn, will expand global markets for trade – benefitting all countries, including the U.S.
On the other hand, if wealthier countries cut their contributions to development, people in poor countries will continue to suffer and their economies won’t grow. The world hardly needs more suffering. And poverty does nothing to improve economic and political stability around the world.
The U.S. spends about 1 percent of its total budget on development aid – about the same as many other wealthier countries. As I will say in my report to the G20, that amount of money isn’t causing the fiscal problems in the U.S. or Europe, and cutting back on development assistance isn’t going to solve them.
The fact is, development aid is a small investment that generates huge returns. In the past 50 years, it has played an important role in agricultural advances that have saved a billion people from starvation. Innovations in the development and distribution of vaccines, and health advances, has reduced the number of children under the age of 5 who die each year – from 20 million to fewer than 8 million. This is even more amazing when you consider that the world population has more than doubled in that time.
The G20 countries have a vital role to play in ensuring that development aid is prioritized where it can make the biggest impact, and ensuring that it is used wisely. I believe there are innovative approaches and partnerships that could help accomplish this.
A half-century ago, roughly two-thirds of the world’s population was living in poverty. Today, those numbers have been reversed, due in large part to development aid provided by the U.S. and other wealthy nations. This is great progress, but there is still more we can do to improve basic living conditions for the world’s poorest 2 billion people.
Tuesday, 16 October 2012
Unit 2: What is GDP?
GDP, or Gross Domestic Product, is arguably the most important of all economic statistics as it attempts to capture the state of the economy in one number.
Quite simply, if the GDP measure is up on the previous three months, the economy is growing. If it is negative it is contracting.
And two consecutive three-month periods of contraction mean an economy is in recession.
What is GDP?
GDP can be measured in three ways:
Output measure: This is the value of the goods and services produced by all sectors of the economy; agriculture, manufacturing, energy, construction, the service sector and government
Expenditure measure: This is the value of the goods and services purchased by households and by government, investment in machinery and buildings. It also includes the value of exports minus imports
Income measure: The value of the income generated mostly in terms of profits and wages.
In theory all three approaches should produce the same number.
In the UK the Office for National Statistics (ONS) publishes one single measure of GDP which, apart from the first estimate, is calculated using all three ways of measuring.
Usually the main interest in the UK figures is in the quarterly change in GDP in real terms, that is after taking into account changes in prices (inflation).
How is GDP calculated?
Calculating a GDP estimate for all three measures is a huge undertaking every three months.
The output measure alone - which is considered the most accurate in the short term - involves surveying tens of thousands of UK firms.
The main sources used for this are ONS surveys of manufacturing and service industries.
Information on sales is collected from 6,000 companies in manufacturing, 25,000 service sector firms, 5,000 retailers and 10,000 companies in the construction sector.
Data is also collected from government departments covering activities such as agriculture, energy, health and education.
Quite simply, if the GDP measure is up on the previous three months, the economy is growing. If it is negative it is contracting.
And two consecutive three-month periods of contraction mean an economy is in recession.
What is GDP?
GDP can be measured in three ways:
Output measure: This is the value of the goods and services produced by all sectors of the economy; agriculture, manufacturing, energy, construction, the service sector and government
Expenditure measure: This is the value of the goods and services purchased by households and by government, investment in machinery and buildings. It also includes the value of exports minus imports
Income measure: The value of the income generated mostly in terms of profits and wages.
In theory all three approaches should produce the same number.
In the UK the Office for National Statistics (ONS) publishes one single measure of GDP which, apart from the first estimate, is calculated using all three ways of measuring.
Usually the main interest in the UK figures is in the quarterly change in GDP in real terms, that is after taking into account changes in prices (inflation).
How is GDP calculated?
Calculating a GDP estimate for all three measures is a huge undertaking every three months.
The output measure alone - which is considered the most accurate in the short term - involves surveying tens of thousands of UK firms.
The main sources used for this are ONS surveys of manufacturing and service industries.
Information on sales is collected from 6,000 companies in manufacturing, 25,000 service sector firms, 5,000 retailers and 10,000 companies in the construction sector.
Data is also collected from government departments covering activities such as agriculture, energy, health and education.
Saturday, 13 October 2012
Unit 1: Cross Elasticity of Demand - Kindle & e-books
Many thanks to Jonny Clark for this excellent example of 'Cross Elasticity of Demand' in action. Students taking Unit 1 this January should think about the following issues:
Why is the XeD of Kindle & e-books negative?
Is this relationship likely to be elastice or inelastic and why?
Also, check out the diagram below, do you understand what is happening? (if not, ask!)
I am a Kindle user!
There, I’ve said it. As the founder member of the Kindle-owners self-help group (KOSH), I’m inviting all fellow addicts to come out and admit likewise – until you admit it to yourself no-one will be able to help you. Until we act collectively, no-one will be able to stop those Amazon dealers from peddling their wares.
If we ever needed proof that they’re out to change the way we consume then you need look no further than the statements made yesterday by Amazon CEO Jeff Bezos who was in the country to promote the launch of the UK version of their new e-reader (Kindle Paperwhite) and the company’s e-book lending service. Interestingly as well, Bezos re-iterated the widely-understood business-model wherein the physical hardware that they sell (the Kindle brand in all of its guises including a tablet called the Kindle Fire) are sold at cost – Amazon do not make a profit from the devices themselves. The true profit comes from content – selling books and other media (such as movies and music).
And herein lays the example that I’ve tried to get across to my students recently. Sales of media products are not just linked to the quality of the film or the book that we wish to consume – but also how easy it is to facilitate the use of that media. The Kindle and its e-books (or the Kindle Fire and its magazines) are the new big example of complementary products. Reduce the price of the hardware to a level that is more accessible then sales of its content start to flourish. It is claimed that e-book readers now read up to 4 times as many books as those who still use the dead-tree versions (although sales of traditional books still outweigh their digital versions). Research is also showing that reading amongst children and young adults has been increased because of the use of technology such as the the Ipad.
But look out Amazon. Reports suggest that a German e-reader called the txtr beagle will soon be available and on sale for less than £10 – its low cost coming from having AAA batteries instead of rechargeable versions and transferring data via Bluetooth instead of wi-fi. At that cost, the beagle could be a real game changer to challenge the Amazon monster – perhaps your school and college could now afford class sets.
Now, I haven’t touched my Kindle all day today. I’ve got it under control, honest. I might have a look to see what Amazon’s Daily Deal has on offer – one look can’t harm can it?
Why is the XeD of Kindle & e-books negative?
Is this relationship likely to be elastice or inelastic and why?
Also, check out the diagram below, do you understand what is happening? (if not, ask!)
There, I’ve said it. As the founder member of the Kindle-owners self-help group (KOSH), I’m inviting all fellow addicts to come out and admit likewise – until you admit it to yourself no-one will be able to help you. Until we act collectively, no-one will be able to stop those Amazon dealers from peddling their wares.
If we ever needed proof that they’re out to change the way we consume then you need look no further than the statements made yesterday by Amazon CEO Jeff Bezos who was in the country to promote the launch of the UK version of their new e-reader (Kindle Paperwhite) and the company’s e-book lending service. Interestingly as well, Bezos re-iterated the widely-understood business-model wherein the physical hardware that they sell (the Kindle brand in all of its guises including a tablet called the Kindle Fire) are sold at cost – Amazon do not make a profit from the devices themselves. The true profit comes from content – selling books and other media (such as movies and music).
And herein lays the example that I’ve tried to get across to my students recently. Sales of media products are not just linked to the quality of the film or the book that we wish to consume – but also how easy it is to facilitate the use of that media. The Kindle and its e-books (or the Kindle Fire and its magazines) are the new big example of complementary products. Reduce the price of the hardware to a level that is more accessible then sales of its content start to flourish. It is claimed that e-book readers now read up to 4 times as many books as those who still use the dead-tree versions (although sales of traditional books still outweigh their digital versions). Research is also showing that reading amongst children and young adults has been increased because of the use of technology such as the the Ipad.
But look out Amazon. Reports suggest that a German e-reader called the txtr beagle will soon be available and on sale for less than £10 – its low cost coming from having AAA batteries instead of rechargeable versions and transferring data via Bluetooth instead of wi-fi. At that cost, the beagle could be a real game changer to challenge the Amazon monster – perhaps your school and college could now afford class sets.
Now, I haven’t touched my Kindle all day today. I’ve got it under control, honest. I might have a look to see what Amazon’s Daily Deal has on offer – one look can’t harm can it?
Tuesday, 9 October 2012
Unit 4: Economic Development - The Lewis model.
The model assumes an economy contains two distinct sectors. Firstly, there is the capitalist sector, characterised by:
1.A capital-intensive manufacturing process, relying on the use of reproducible capital
2.Higher average wages
3.Higher marginal and average productivity
4.Higher demand for labour
Contrasting this, there will also be a subsistence or agricultural sector in an economy. This involves:
1.A labour-intensive production process
2.Low dependency on capital
3.Low marginal and average productivity
4.Low average wages
At an early stage in a country’s development, the subsistence sector is very large. As the main limit on agricultural production is likely to be land, not labour, there comes a point where the marginal productivity of every new farmer or labourer is zero. These workers are considered to be surplus labour. As a result, these workers will move to the capitalist sector over time. Because they are surplus labour, this means that the workforce in the capitalist sector can be increased without wages rising. Early on in development, the Lewis Model assumes that this source of labour is effectively unlimited.
Because marginal productivity is high, an increase in workers available without an increase in wages (which Lewis assumes to be fixed because of the assumption that labour from the subsistence sector is unlimited) means profits will increase. These profits are assumed to be re-invested. This investment leads to growth within the sector, causing the capitalist PPF to shift outwards.
Although the surplus labour from the subsistence sector is assumed to be unlimited initially, eventually it will run out, meaning moving additional labour from agriculture to manufacturing requires a decrease in the output of agriculture. As such, capitalist employers are now competing for labour, causing wages to start to rise as capital accumulation rises (assuming all profits are used to purchase capital). This point is the Lewis turning point of the title.
The model has been criticised primarily on the basis of the assumptions it makes. Firstly, it assumes that capital is the main factor contributing to long run growth, like other exogenous growth theories. For a developing economy, there may be some truth to this concept, but even in this situation capital investment is evidently not the only factor causing growth: improved government policies, for example, could improve human capital (as opposed to the fixed capital used in the model), leading to increased growth.
Secondly, the model assumes that all profits will be re-invested. This is often untrue; it may be in the short run interests of a company not to invest (as this increases costs and so decreases profits), meaning particularly if a company is poorly managed, investment will not happen to the same extent, limiting the effects on long run growth.
A final key criticism is that the model assumes that there are a large number of unproductive agricultural workers. This may be the case at certain times of the year, but the number of workers required for agriculture varies seasonally – at harvest, those workers who were previously unproductive may become productive. As such, transferring workers to the manufacturing sector may in fact cause a reduction in agricultural output, even if those workers are unproductive and so seem surplus for much of the year.
Empirical evidence supports the model to some extent – India, for example, saw agriculture as a share of employment fall from 74% in 1972 to 57% in 2000, while services and industry grew from 26% to 43% (ISI). Indian investment has also risen considerably and growth has remained high, facts that support the Lewis Model.
However, certain countries buck this trend; Egypt, for example, has managed to achieve relatively high growth recently (more than 5% since 2006), despite investment decreasing almost continually from 1960 levels as a percentage of GDP (from 36% to 8% in 2011, IMF) and agriculture rising as a percentage of total employment between 2002 and 2008 (from 27.5% to 31.6%). As a result, though the model is a useful tool for understanding some aspects of growth, it is clearly limited in its accuracy.
Mark Austen and Max Goswami-Myerscough
Monday, 8 October 2012
Unit 4: Globalisation - Tesco in India
Unit 2 & 4: UK Macroeconomic data
Click here to access a great piece (with questions) on the reasons behind the UK and the double dip recession. Try and answer the questions yourself.
Saturday, 6 October 2012
Unit 4: Economic Development - S Sudan
The worlds newest country is desperate to develop. However, there are huge issues that are stopping this from happening. Here is a short new report on the challenges facing post-conflict South Sudan. South Sudan has one of the lowest literacy rates in the world, as only about a quarter of its people can read and write. Decades of civil war meant few people had the chance to go to school. The main university has just reopened but the contrasts with the gleaming lecture halls of the developed world are as stark as they can be.
Questions for discussion:
How can South Sudan improve literacy rates amongst its population?
Is it as simple as throwing money at the problem or is there a cultural issue as well?
Questions for discussion:
How can South Sudan improve literacy rates amongst its population?
Is it as simple as throwing money at the problem or is there a cultural issue as well?
Unit 4: Economic Development - Vietnam
High inflation threatens Vietnamese growth
Vietnam has been coined Little China by some who have lauded their fast growth and development in recent years. But high inflation and property bubbles and a growing problem of non-performing loans and fragile banks threatens to derail progress. This short news report looks at the economic situation in Vietnam and includes pictures of a huge infrastructure project linking Vietnam and China - financed by the Japanese
Questions for discussion:
Is inflation inevitable when you grow at such a quick pace?
Vietnam has been coined Little China by some who have lauded their fast growth and development in recent years. But high inflation and property bubbles and a growing problem of non-performing loans and fragile banks threatens to derail progress. This short news report looks at the economic situation in Vietnam and includes pictures of a huge infrastructure project linking Vietnam and China - financed by the Japanese
Questions for discussion:
Is inflation inevitable when you grow at such a quick pace?
Tuesday, 2 October 2012
Unit 4: Current Account deficit - Revision Notes
A current account deficit measures the balance of trade in:
The financial account comprises of 2 main features:
a) Short Term Capital flows e.g. hot money flows and purchase of securities
b) Long Term Capital flows e.g. investment in building new factories
- goods
- services
- net investment incomes and transfers
A deficit on the current account means a country is importing more than we are exporting. This will have to be matched by a surplus on the financial and / or capital account.
b) Long Term Capital flows e.g. investment in building new factories
Some economists argue we need not worry about a current account deficit. This is because:
If a current account deficit is financed from long term capital inflows then this can be beneficial for the economy. Inward investment can increase the productive capacity of the economy.
In an era of globalisation it is much easier to attract sufficient capital flows to finance the deficit.
If the deficit gets too large it will cause a devaluation which helps to reduce the deficit. Also when there is a slowdown in consumer spending the deficit will fall.
A current account deficit provides an outlet for domestic demand and prevents inflation.
Reasons to Worry about a Current Account Deficit.
1. There could be problems financing the deficit in the long term. A short term deficit is not a problem, but if you have a deficit of over 6% of GDP then it is a problem if you rely on Capital flows. A significant part of the current account deficit in US is finance by Chinese investors buying US securities, at relatively low interest rates.
2. Most countries would not be able to borrow such large amounts at low interest rates. The US currently can because the US is seen as the World’s reserve currency. However if attitudes to the US economy change and investors lose their confidence in the US economy, they will stop buying US debt. This will cause 2 problems.
US interest rates will need to rise to attract enough people to buy the debt. These higher interest rates will reduce demand in the economy. Higher interest rates will particularly hurt American consumers who have large amounts of debt at the moment.
If capital flows can’t be attracted then the dollar will continue to devalue further. This could cause inflationary pressures, interest rates may need to rise to stabilise the dollar.
Basically to correct the deficit would be a painful experience for the US economy and result in a slowdown or possibly recession
3. In the US the current account deficit is to a large extent caused by excess spending in the economy. It is partly caused by government borrowing which increases Aggregate Demand in the economy and hence growing demand for imports. A large current account deficit is often a sign of an unbalanced economy. It could be a sign of structural weakness and an uncompetitive manufacturing sector. This is particularly a problem in the Eurozone where the exchange rates are permanently fixed.
4. A deficit on the current account increases foreign liabilities. In the beginning a current account deficit could be just a deficit on buying goods. However over time the deficit will be increased by the interest payments on the capital surplus. Foreigners invest in the US. On these investments they receive interest payments or dividends. These dividends count as a debit on the current account. Therefore the longer the deficit goes on the higher the level of investment income debits will be accrued. This means that in the future the economy will need to attract capital flows just to pay off the investment income. As well as the deficit on goods and services.
US current account deficit reached 6% of GDP in 2006. This reflected strong domestic demand and a decline in competitiveness. The credit crunch caused a reduction in US current account deficit.
Example of Iceland's Current Account Deficit
Iceland is an example of a country with a large current deficit which later imploded.
In the years leading up to 2008, there was a sharp inflow of capital to Icelandic banks. This enabled Iceland to run a record current account deficit. Iceland was spending more than they were earning. When capital flows dried up, banks lost money and there was a rapid deterioration in the current account.
Current Account Deficits in the Eurozone
In the Eurozone, current account deficits are a bigger cause for concern because countries have a permanently fixed exchange rate (common currency). Therefore they can't devalue to restore competitiveness. Therefore countries may have to pursue internal devaluation (deflation) to restore competitiveness.
Conclusion
It depends on the size of the current account as a % of GDP. Clearly in Iceland's case, over 20% of GDP was unsustainable. But, in US case 6% of GDP later shrank to a more manageable 3% of GDP.
A current account deficit is often a signal of another underlying problem. For example, a banking boom (in Iceland's case). A boom in domestic demand or a lack of competitiveness in Eurozone.
If a current account deficit is financed from long term capital inflows then this can be beneficial for the economy. Inward investment can increase the productive capacity of the economy.
In an era of globalisation it is much easier to attract sufficient capital flows to finance the deficit.
If the deficit gets too large it will cause a devaluation which helps to reduce the deficit. Also when there is a slowdown in consumer spending the deficit will fall.
A current account deficit provides an outlet for domestic demand and prevents inflation.
Reasons to Worry about a Current Account Deficit.
1. There could be problems financing the deficit in the long term. A short term deficit is not a problem, but if you have a deficit of over 6% of GDP then it is a problem if you rely on Capital flows. A significant part of the current account deficit in US is finance by Chinese investors buying US securities, at relatively low interest rates.
2. Most countries would not be able to borrow such large amounts at low interest rates. The US currently can because the US is seen as the World’s reserve currency. However if attitudes to the US economy change and investors lose their confidence in the US economy, they will stop buying US debt. This will cause 2 problems.
US interest rates will need to rise to attract enough people to buy the debt. These higher interest rates will reduce demand in the economy. Higher interest rates will particularly hurt American consumers who have large amounts of debt at the moment.
If capital flows can’t be attracted then the dollar will continue to devalue further. This could cause inflationary pressures, interest rates may need to rise to stabilise the dollar.
Basically to correct the deficit would be a painful experience for the US economy and result in a slowdown or possibly recession
3. In the US the current account deficit is to a large extent caused by excess spending in the economy. It is partly caused by government borrowing which increases Aggregate Demand in the economy and hence growing demand for imports. A large current account deficit is often a sign of an unbalanced economy. It could be a sign of structural weakness and an uncompetitive manufacturing sector. This is particularly a problem in the Eurozone where the exchange rates are permanently fixed.
4. A deficit on the current account increases foreign liabilities. In the beginning a current account deficit could be just a deficit on buying goods. However over time the deficit will be increased by the interest payments on the capital surplus. Foreigners invest in the US. On these investments they receive interest payments or dividends. These dividends count as a debit on the current account. Therefore the longer the deficit goes on the higher the level of investment income debits will be accrued. This means that in the future the economy will need to attract capital flows just to pay off the investment income. As well as the deficit on goods and services.
Example of Iceland's Current Account Deficit
In the years leading up to 2008, there was a sharp inflow of capital to Icelandic banks. This enabled Iceland to run a record current account deficit. Iceland was spending more than they were earning. When capital flows dried up, banks lost money and there was a rapid deterioration in the current account.
Current Account Deficits in the Eurozone
Conclusion
It depends on the size of the current account as a % of GDP. Clearly in Iceland's case, over 20% of GDP was unsustainable. But, in US case 6% of GDP later shrank to a more manageable 3% of GDP.
A current account deficit is often a signal of another underlying problem. For example, a banking boom (in Iceland's case). A boom in domestic demand or a lack of competitiveness in Eurozone.
Monday, 1 October 2012
Unit 3: Prisoners Dilemma (Game Theory)
The second form of game theory that you guys need to understand...The Prisoners Dilemma.
Questions for discussion:
How does this suggest firms should compete?
What are the benefits/drawbacks for students?
Questions for discussion:
How does this suggest firms should compete?
What are the benefits/drawbacks for students?
Unit 3: Monopoly & Microsoft
Recent reports have suggested that some software companies are unhappy with the innovations they have brought with the latest incarnation of their Windows operating system. Designed primarily for tablets and sporting a more 'application market ' style user interface this is meant to be the big comeback of the flying window. The makers of of block-building Minecraft and similar games writers Activation Blizzard and Valve have expressed a familiar rage against the MS machine.
It seems that Microsoft are trying a few new domination tricks. The software firms object to the 30% cut Microsoft are taking when selling apps using their on-screen Market suggesting this could put some firms out of business. Even worse, in order to sell through Windows 8, each firm has to have its software certified by Windows, potentially restricting creativity and competition.
The creators of Minecraft are threatening to refuse to sell their product on Windows 8 - a brave but risky strategy that most firms would find hard to copy given the domination that Microsoft has.
Questions for discussion:
How are microsoft competing?
Is there any eviodence of restrictive practices?
Will the consumer benefit in the long run?
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