Johan Norberg – Picking Winners or Losers
06 May 2017 Leave a comment
in applied price theory, economics of bureaucracy, industrial organisation, politics - New Zealand, Public Choice, rentseeking, survivor principle Tags: industry policy, picking winners
.@TheEconomist thinks US domestic airlines are a successful oligopoly!?
05 May 2017 Leave a comment
in economic history, industrial organisation, transport economics Tags: airline deregulation, cartel theory, cartels, conspiracy theories, game theory, oligopolies
ON THE PERSISTENT FINANCIAL LOSSES OF U.S. AIRLINES: A PRELIMINARY EXPLORATION Severin Borenstein Working Paper 16744 January 2011.
Failing firm defence for legacy media mergers
03 May 2017 Leave a comment
in industrial organisation, law and economics, politics - New Zealand Tags: anti-trust law, commerce commission, competition law, creative destruction, failing firm defence, legacy media
There is a large literature on the failing firm defence to merger law. I wrote an Australian Law Journal article about that defence many years ago.
The essence of the argument is that when a firm is to fail, the choice is between a high cost single plant monopoly and a lower cost multi-plant monopoly that absorbs the asset failed firm. For today’s purposes, that would be newspapers that would otherwise close but for the now blocked Fairfax/NZME media merger
Some think allowing mergers of market leaders with failing firms is good for competition.
To get a merger clearance on the basis of the failing firm defence, the merging companies must provide sufficient, compelling evidence that the failing firm will inevitably leave the market without the merger and there is no less anti-competitive alternative.
The basic rationale behind the doctrine is that since the failing firm would have left the market anyway due to its financial collapse, any harm to competition caused by the loss of an independent market player would arise regardless of the merger. Allowing the merger saves scrapping the assets of the failed firm.
Posner and Easterbrook described the failing firm defence as one of the most pernicious doctrines to ever arise in antitrust law. They did not elaborate much.
Trailblazers: The New Zealand Story – Full Video
29 Apr 2017 Leave a comment
in economic history, economics of regulation, industrial organisation, politics - New Zealand, Public Choice, public economics, rentseeking, survivor principle
Union membership by sector in New Zealand
28 Apr 2017 Leave a comment
Source: The state of New Zealand Union membership in 2014, Sue Ryall and Stephen Blumenfeld.
#livingwage movement just can’t handle the truth @LWEmployerNZ
27 Apr 2017 Leave a comment
in industrial organisation, labour economics, labour supply, minimum wage, personnel economics, politics - New Zealand Tags: conjecture and refutation, critical discussion, crybaby left, living wage, Twitter left
Looks like the living wage movement will not be taking up my challenge for a public debate anytime soon.
Making trouble again for @stevenljoyce for @TaxpayersUnion
21 Apr 2017 Leave a comment
in applied price theory, applied welfare economics, industrial organisation, international economics, politics - New Zealand, Public Choice, rentseeking, survivor principle Tags: picking winners
The Dutch disease for the benefit of #GarethMorgan @stevenljoyce
18 Apr 2017 1 Comment
in applied price theory, applied welfare economics, economic history, industrial organisation, international economics, politics - New Zealand, Public Choice, rentseeking, survivor principle Tags: Dutch disease, export subsidies, picking winners
I am putting in a Official Information Act request to see if anyone advise ministers that a export promotion target results in a matching increase in imports along with a large appreciation in the New Zealand dollar. Did New Zealand dodge the Dutch disease from this foolhardy export promotion policy? The Dutch Disease story is one of sectoral shifts.
In the 1960s, with fixed exchange rates under the Bretton Woods system, the Netherlands discovered off-shore natural gas. As natural gas was extracted, it increased domestic income and spending. Investment was redirected toward the natural gas sector. Dutch wages and prices began to rise gradually. The Dutch guilder became overvalued in real terms, their industrial products became uncompetitive, and the manufacturing sector shrunk. This phenomenon of de-industrialization in the presence of rich natural resources was called the Dutch disease. They got natural gas but lost manufacturing.
In the late 1970s and early 80s, the UK experienced similar de-industrialization under a floating exchange rate regime. They discovered and exploited the North Sea oil fields. Since the global oil price was rising, the UK was expected to earn a great amount of foreign exchange in the future. But even before these earnings were realized, the British pound appreciated suddenly in both nominal and real terms. This damaged the British manufacturing sector.
Source: MF model – float
If there is an increasing demand for New Zealand exports if the Business Growth Agenda target of increasing New Zealand exports was successful, there is an increase in demand for New Zealand dollars to pay for these exports. This will result in an appreciation of the New Zealand dollar making imports cheaper. This will switch demand for New Zealand competing industries to these imports.
This process of currency appreciation and expenditure switching will continue until export match exports again. There is nothing wrong with an export boom as long as it is based on comparative advantage rather than subsidies.
Here Comes Supersonic Flight: The Rebirth of a Former White Elephant
14 Apr 2017 Leave a comment
in applied price theory, economic history, industrial organisation, politics - USA, rentseeking, survivor principle, transport economics Tags: corporate welfare, picking winners
Supervisory and monitoring costs and occupational segregation by sex
06 Mar 2017 Leave a comment
Published: Goldin, Claudia. “Monitoring Costs and Occupational Segregation by Sex: An Historical Analysis,” Journal of Labor Economics, Vol. 4, (January 1986), pp. 1-27.
Utopia, you are standing in it! 
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