New Operating System for Smartphones: We Benefit or Not?

Competition is good for consumers because it reduces prices. In the market for smartphone operating system, a new system Tizen has been introduced which is struggling to expand its market share among already established competitors iOS and Android. Samsung for the first time is using Tizen in its Smartphone Z which was launched today. To me, having Tizen in the market, however, would have little effect in our overall welfare. Tizen is nearly perfect substitute over other operating systems (given there is no big discrepancy in features) but people don’t have choice to pick one over others as they are bundled together with the phone you purchase. Given our budget constraint, we cannot optimize our nearly downward-sloping straight line utility curve for Tizen vs. other operating systems because we cannot buy the products separately and use them in our own device. Having said that, we can increase our welfare because of lower prices that may result for smartphones due to higher competition in operating system market, even though we wouldn’t be able to maximize our utility level as much due to the nature of the utility function itself and rigidity in choices.

Unemployment among Aboriginal Youths: Would Better Education for them be a Panacea?

Upon reading this article tonight I was sort of little absorbed to know that the youth cohorts from aboriginal communities are facing very difficult job market situations which have left many unemployed. Based on other research reports which I read afterwards (for example the one published recently by the United Nations) as well as in line with the views forwarded by John Richards from Simon Fraser University as cited in the article, my conviction now is that education comes first to address this issue properly. This typical situation can be explained even from simple textbook models of demand and supply. In the labour market, the minimum wage set by the government appears to be above the equilibrium wage for these people as they may want to take the job even at lower rate than the minimum wage, owing to the fact, as pointed out in the article, that aboriginal youths lack enough education depriving them of necessary skills to acquire the job. The minimum wage in this case is a binding minimum wage for them which create unemployment, the situation these people are facing now. With any policy intervention that promotes education for this group, the labour demand curve will shift to the right, at least in the long-run, which will bring equilibrium wage at higher level (that is, towards the current minimum wage level) and then the unemployment rate among these groups would start falling. Just my thought. Your opinions are most welcome.

Cost-Benefit Analysis of Doing Cost-Benefit Analysis???

While cost-benefit analysis (CBA) has been made mandatory by some governments before launching any program that has significant consequence in the society, the debate has often raised a question whether doing CBA is necessary or not (see a recent controversy in the US). We have learned from textbook analysis that there is a vast disagreement between CBA experts and government agencies regarding the way the CBA is carried out (analysts vs. guardians) but its usefulness in itself cannot be underestimated. Some have even argued that CBA undermines democracy but conducing CBA help allocate resources most efficiently in the society which in fact reinforces democratic norms. Whether it is necessary to do CBA or not depends pretty much on how much effect the project leaves in the society when it is implemented. When a project under consideration is miniscule in size and isn’t expected to have much impact in the society, paying hefty amount to analysts to conduct CBA obviously doesn’t make sense but medium-to-large size projects deserves to be scrutinized by regulatory agencies requiring them to do CBA because such projects have long-term impacts in the society which must be scrutinized.

Will Laurentian University Give More to Sudbury Residents than the Local Farmers?

(This post is intended to my students at Laurentian University who are taking a course on cost-benefit analysis this semester) It was interesting to have got caught on a blog article this morning relating to a project Laurentian University is involved in and I believe this can serve as a perfect example right under our nose to discuss and understand more on the topic we are currently discussing in class now. Speaking in CBA language, the project new School of Architecture of Laurentian University is in consideration (maybe the project has progressed substantively ahead at this moment than as depicted in the article) against the counterfactual (or status quo) of keeping Sudbury Farmer’s Market in place. The article makes many remarkable points on benefits and costs of this project, such as the extent to which the project will contribute to vibrate the local economy, job prospects for the city residents, and the impacts on local farmers and so on so forth. Taking consideration to all the impacts the project will bring, I am eager to read your opinions whether this project will contribute net positive social benefits to Sudbury community (or the province or the country as a whole). So far as my view is concerned, the benefits seem to outweigh the costs no matter what standing we take to conduct CBA (except the standing given to local farmers). Simply speaking, the multidimensional positive impact of education cannot be underestimated at least in the long-run which will be more than enough to offset the costs the society has to bear at present. Even though the costs incurred after the closure of the farmer’s market may not be less substantial, we should happily take the new project as a new hope for Sudbury community and the demise of farmer’s market as an outcome of creative destruction, thanks to the theory propounded by Joseph Schumpeter.

A Dilemma I Observed Down Here in Nepal

I already came down to Nepal and started my job in the country's central bank. After a brief review of macroeconomic situation of the country I observed that the bank was facing a dilemma which has posed a serious question for the bank's policy-makers. The dilemma was that the bank was following a tight monetary policy (by decreasing money supply) in recent months but the inflation was soaring up (currently about 10 percent). The bank, in fact, had pursued this policy to control the rising inflation but the outcome is unexpected. We learned in textbook that money supply and inflation had positive relationship but we didn't observe this situation here in Nepal, at least for now. To my understaing, money supply is not the only factor to govern inflation but we have so many other factors - such as cost condition of the companies, distribution channel that may block smooth flow of goods and services in the economy, and so on others - that determine inflation. I expect your opinion explaining why this situation could have occurred.