Thursday 28 April 2011


There is a problem with the internet for those studying economics.

Take as an example www.jarvmp3.com This is a free music download site was valued at $16,000 after only a month being online. Today it's value is substantially more. The site allows you to search for music and download it legally.

This seems like a free good. Of course its not a pure public good. You have to have internet access so the service is excludable. But there is no rivalry, any number of people can download music without diminishing the ability of others to do so . Yet it is not a private good - there is no price. That leaves us with some sort of mixed good.

There are external benefits for sure and the people who produced the music get nothing - a clear private cost but not to the buyer. Its worth thinking about.

The service gains its value from advertising. the more visitors the more it is worth (so if you use it click on some ads for the benefit of the person who created it).

Tuesday 26 April 2011

The trade war within



The article attached below is perfectly timed for the 585 stimulus (extractAdd Image 4). It examines the complexity of European trade relations especially when dealing with developing countries. The article correctly preaches reciprocity is desirable when adopting openness but not when it includes raising barriers. The other interesting point is that whilst open trade would greatly benefit Europe with price stability and competitiveness it would only further expose the southern nations desperately sinking in debt.

http://www.economist.com/node/18586846?story_id=18586846