Economies of Scope

Car/Dog Wash Edition

FaceFone?

Here's an interesting rumor spreading through the internets: Facebook is reportedly working on making a "highly-integrated" cellphone that would carry the Facebook name.  Similar to Google's G1 cellphone, Facebook would write the software for the device and contract a third party to construct the gadget.

This is an interesting example of Economies of Scope.  Economies of scope basically means that as a company becomes adept at making one product, it can use the technologies and resources it has developed to make that one product to expand into different industries.  Facebook is good at writing social networking programs, so it can easily use this know-how to program a cell phone that will allow people to poke their buddies, strangers, and stalk their old high school friends anywhere, anytime.

I've asked many college students what they think about the FaceFone, as I like to call it.  So far, no one has said they would be interested in the least bit in buying the phone. "I've already got a Facebook app on my phone, why do I need a whole new cellphone?" is the common response.  Maybe Facebook will be able to differentiate this phone from the way the applications work enough to attract buyers, maybe not. Only the market will tell.

-Brandon

Recycling is Good, Right?

No, not always.

Ideas Have Sex, Good Things Happen

HT to Knowledge Problem

Incentives

"Most of economics can be summarized in four words: 'people respond to incentives'. The rest is commentary." - Steven Landsburg

Many times the two best words you can hear when you are apartment hunting (especially if you are a broke college student) are "utilities included". I can say from personal experience that it is awesome. People in New York City do too, but having utilities included in the rent may cause some unintended consequences.

Also, I found the quote above here amoung some great quotes about economics and government. Some of those quotes are from my new favorite POTUS.

Good Economists, Bad Economists and Walmart...

is the title of this pretty good article.

Inconsistency

The big issue in the news recently is the ruling from an California court striking down Proposition 8. The issue of the government's role in regulating marriage is a divisive issue and people from all dimensions of the political spectrum make their case with different reasoning. Many who favor the current ruling talk of individual rights and how Americans ought to be free to enter into the voluntary contract of marriage with whoever they want. What seems inconsistent to me is when some of those same people advocate restrictions on economic freedom which are supported by the same logic and arguements. The inconsistency problem also runs the other way. How can you support economic freedom based on individual rights and not support personal freedoms, in my eyes they come from the same logic. I think that the real problem in the marriage debate is the presence of government at all, it seems to only cause problems and conflicts of interest. Everyone feel free to post their own thoughts in the comments.

Supply and Demand-BP Edition

A new story on CNNMoney.com claims that BP stations may soon offer cheaper gas. Basic supply and demand from any ECON 101 class can help us understand why. Some people are boycotting BP gas stations, even though that measure is misguided since the actual gas station owners will be the ones taking the biggest hit from any such campaign. Regardless, sentiments such as a boycott will lower demand. Lower demand leads to lower prices if you hold everything else equal. It is easy to find everyday examples of economic principles.

Great Tattoo Ideas

Economists love graphs.  I like to graph how many times Dr. Scafidi says "Write that down!" in one of his classes.  But if you want an actual useful graph, and want a new one every day, then this website will supply you with enough colors and lines and current events that you may actually learn something.

http://bit.ly/17gsGk

(Tip of the hat to The Economist)

-Brandon

Unintended Consequences

Puerto Rico recently enacted a drastic plan to combat the black market for birth certificates issued by this protectorate: every birth certificate they have ever issued has now been declared invalid and will have to be replaced with a new one.  This could actually make the problem worse!

The birth certificate will be redesigned so that the massive amount of void ones truly will be useless.  This brings the quantity of usable illegal certificates to zero.  This will make a mad scramble among document forgers to be the first to produce new fakes.  The attached article says that the old forged documents could be sold for $5,000; these new forged papers will at first be worth even more, providing incentive for even more people to enter this black market.  Unless Puerto Rico makes the punishment for and likeliness of being caught in the trade significantly high, it stands a real chance of actually seeing even more unlawful documents floating around (Naturally, the price of the documents would decrease again until profits disappear, causing some forgers will leave the market).

What do you propose Puerto Rico do to put an end to the illegal birth certificate trade? Our classes have taught us to increase either the penalty, chances of incurring the penalty, or a combination of both, but I want you to think outside the box. Should they even try to destroy the market? Comment with your ideas.

Here's the link to the original article.

-Brandon