NAFTA Years Later

[Adam Smith]

Re: Re: Foooooore!

If you ask a manager if they set marginal revenue equal to marginal cost, they will look at you as if you have three heads. But if you simply ask them if there is any other price they could charge which would give them greater profits they all say "Of course not!" What the theory tells you here is that firms have to balance new versus existing customers. And that is all you need to establish that less than competitive firms will still pass along at least some of the gains. (edit: The more competitive the market, the harder it is to raise prices to existing customers, resulting in a larger porportion of cost savings passed on to consumers.)

Originally posted by Master Zen Just looking at for example, the manager-shareholder dilema in US firms is convincing arguments that firms don't maximize neo-classically, also considering the rival interests of firm groups... you get the picture.

This is an agency problem, which is a different issue. The firm can maximize profits but then piss most of them away in excessive (executive) costs.

[MichaeltheGreat]

Originally posted by Master Zen
PRD!!!

I would never join that party, they are rebelious idiots who have no ****ing clue on how to run a country, just complain and ***** about things and organize riots. Much less PAN who are a bunch of pro-US pro-Catholic elitist lying scum, oh and no words can express the contempt I feel for PRI...

So, that leaves me with no party to identify which, and hence, no party to vote in the next elections (something which I don't plan on doing). So, consider me an "enemy of the state" for all that means, and an enemy of the political system as a whole, not just any party in particular.

For the record, I am a leftist in economic affairs (which is strange since I am studying in a very elitist school) but very much an authoritarian if I were to run this joint. God help us if I ever do...

Just as I thought. Next time you head down to see Marcos, tell him for me that if he ships me up a couple of truckloads of Kalashnikovs, I'll open up a northern front for him.

[Master Zen]

Re: Re: Re: Foooooore!

Originally posted by Adam Smith

This is an agency problem, which is a different issue. The firm can maximize profits but then piss most of them away in excessive (executive) costs.

Depends on who sets the maximization function (if such a thing exists). Most likely when this happens is when you have it in function not solely on the firm's benefit but on a managerial benefit which is fit in the equation. The result therefore is the maximization of the firm and the manager's benefit.

NAFTA to neo-classical theory... what a nice economics thread. Don't you think we'll scare away the others though, if we start getting too technical?

-MZ

[Kidlicious]

Re: Re: Re: Foooooore!

Originally posted by Adam Smith
If you ask a manager if they set marginal revenue equal to marginal cost, they will look at you as if you have three heads. But if you simply ask them if there is any other price they could charge which would give them greater profits they all say "Of course not!" What the theory tells you here is that firms have to balance new versus existing customers. And that is all you need to establish that less than competitive firms will still pass along at least some of the gains. (edit: The more competitive the market, the harder it is to raise prices to existing customers, resulting in a larger porportion of cost savings passed on to consumers.)
This is an agency problem, which is a different issue. The firm can maximize profits but then piss most of them away in excessive (executive) costs.

I think that firms have a tendency to produce where MR < MC, especially firms who can gain market power from it. That brings a lower price and prevents competition. Is that the way you see it Master Zen?

edit: changed the > sign to a <. Argh!

[Arrian]

Don't you think we'll scare away the others though, if we start getting too technical?

I'm already gone, fellas. Have a blast

There is a reason I switched from Econ to History.

-Arrian

[Master Zen]

Originally posted by MichaeltheGreat

Just as I thought. Next time you head down to see Marcos, tell him for me that if he ships me up a couple of truckloads of Kalashnikovs, I'll open up a northern front for him.

Good, you'll take care of the northern front, I'll take care of the central front, and Marcos down south..

Who knows, maybe 10 years from now the picture of us marching into Mexico City will be just as famous of that shot of Zapata and Villa doing the same 90 years ago..

IT'S REVOLUTION BABY!

[Master Zen]

Originally posted by Arrian




I'm already gone, fellas. Have a blast

There is a reason I switched from Econ to History.

-Arrian

Boooo

You should have sticked around and studied economic history it is fascinating. I'm especially fond of the history of the industrial revolution, i.e. what made some countries rich. I think the clues to development are hidden very deep within that history and I think I'm slowly finding them out.

Some good books on that: Why the West Grew Rich (Nathan Rosenberg), The Wealth and Poverty of Nations and The Unbound Prometheus (both by David Landes), The Rise of the Western World (Douglass North), this last one is pre-industrial but it serves as a good backdrop. They are pretty easy to digest, no huge regressions and stuff like that, just good history.

-MZ

[Kidlicious]

Originally posted by Master Zen


Boooo

You should have sticked around and studied economic history it is fascinating. I'm especially fond of the history of the industrial revolution, i.e. what made some countries rich. I think the clues to development are hidden very deep within that history and I think I'm slowly finding them out.

Some good books on that: Why the West Grew Rich (Nathan Rosenberg), The Wealth and Poverty of Nations and The Unbound Prometheus (both by David Landes), The Rise of the Western World (Douglass North), this last one is pre-industrial but it serves as a good backdrop. They are pretty easy to digest, no huge regressions and stuff like that, just good history.

-MZ

What's the theory? The US used import substitution, right?

[Arrian]

I did take a course or two taught by a professor whose specialty was Economic History. Irish history. Interesting stuff on the famine.

-Arrian

[Master Zen]

Re: Re: Re: Re: Foooooore!

Originally posted by Kidicious


I think that firms have a tendency to produce where MR < MC, especially firms who can gain market power from it. That brings a lower price and prevents competition. Is that the way you see it Master Zen?

edit: changed the > sign to a <. Argh!

Well, the monopoly power would of course be used to drive out competition. Thus, monopolies produce at a price low enough that no potential competitor can compete with, yet much higher than what they could if they were playing at MR = MC.

My idea, beneath all this theory is that all industries pick up a certain degree of monopoly power (and this is actually consistent with neo-classical theory as perfect competition would disable firm entry to the market altogether) and that there is more or less an agreement on prices through a certain range of firms within the industry.

[Master Zen]

Originally posted by Kidicious


What's the theory? The US used import substitution, right?

Actually yes, it did although the US became unique at first not only because of new products but because of a new process, in this case it was called "the American way of manufacturing" which was a precursor to mass-production.

Anyway, the "answers" which I was referring to were actually in the institutional framework which these countries were in, IMO that explains development much better than any other.

Yes, I'm a sucker for institutionalism

[Master Zen]

Originally posted by Arrian
I did take a course or two taught by a professor whose specialty was Economic History. Irish history. Interesting stuff on the famine.

-Arrian

Economic history is beautiful. It makes you think differently about things you normaly held as obvious.

[Willem]

Originally posted by Drake Tungsten

A petition with 400 signatures is calling for a duty on all Canadian wild blueberries, not just those from Quebec.

You Canucks are getting upset about a petition that has only garnered 400 signatures? Jesus, I know it's boring up there, but there must be better ways to spend your time than *****ing about non-existant American slights.

If it was just an isolated incident you'd have a point, but this sort of thing keeps happening over and over again ad nauseum.

[Dinner]

There are almost 300 million people living in the US. You can get 400 signatures for a petetion to do just about anything. What's important isn't what some nut ball asks people to sign but what the government does.

[Imran Siddiqui]

Yes, economic history is interesting. Which is why I think the US should be more free trade inclined. I look back to when England repealed the Corn Laws (tariffs) in the 1600s. In the next few centuries, England became the economic powerhouse because their industries had to learn to become more efficient in order to compete... and consumers benefited all the way.

Frankly I think we should go to a more free trade position (in reality, not just in rhetoric) and stop these damned subsidies to failing industries.