If anything, this research should prove that markets are NOT efficient. Even as the world's largest and best developed economy, we've yet to reach the efficient market (such assumptions as: perfect and uniform information, etc). It's not that I'm saying efficient markets don't exist, but I hope this Google experiment proves it. Honestly, they're not making enough profit to warrant a high stock price given their EPS. I'm very curious, though. The dataset from this experiment should look interesting. Is the author going to release it free of charge to academics? I'd hope so.
Well, I'd argue that while cars and bikes have gotten more stable at higher speed, drivers havent. The average driver is still a moron that doesn't know where the corners of his/her car are, eats while driving, and attempts to do all sorts of other shit behind the wheel. If only we could make drivers less dangerous...
Well, I suppose you're marginally better than doing all of the above and sniffing coke.
you love the guessing game
on
Nano Body Building
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· Score: 5, Insightful
Don't we all? When a technology barely gets underway, everyone pours out their guesses as to how far it will be in 20 years. Remember Conan doing those "in the year 2000" sketches? I swear back in the 50's people thought we'd have flying cars by now!
Like any technology, the research dollars will probably go towards those projects with the highest expected returns. I might be a cynic, but rather than curing a disease, I'll bet we'll find a new flood of cosmetic upgrades.
Unfortunately, most firms will save a few clock cycles.. err, dollars to let the coder make the decision rather than hire a security expert.:) The average manager trusts his code staff simply because he knows no better, thus wont spend extra money on a "needless" consultant.
Yeah, its pretty sick when you can play with a previous working key and "make it fit". That might work on my 10 year old Toyota, but should NOT work on my secure data. Is this due to carelessness, though, or do we need better random generation capability to stop that threat? I remember seeing this before:
Like the subject says, could carelessness in encryption have been a non factor even a couple years ago? Does the raw processing power on the average desktop make it that much easier to exploit a mistake or break weak encryption? In any case, I hope Winzip realizes "security" and "encryption" are more than just buzzwords.
You're exactly right. I posted the same earlier and nobody seems to want to hear it. MS isn't violating any economic principles, but are rather acting like any other firm in their position would. We still buy their software mainly because the network externalities associated with their OS force an inelastic demand curve.
While I agree, my counter would be that the fringe HAS to be more innovative, otherwise they have no ability to differentiate from the dominant firm which would probably stagnate their market share. They benefit from the dominant firm's adoption of their features, as some will recognize the source and at least try the product. I do agree, though, that MS can sit back due to its customer base. Especially in the operating system market, network externalities are rampant and may possibly be the single greatest barrier to a consumer switching platforms. Funny that classical economists still don't see network externalities as a barrier to entry. Could have fooled me on that one!
From an accounting standpoint, yeah, its a fixed cost. If you really believe that markets are efficient, MS will take a hit if they try to pass it on. I hope so, because there's developers out there who could use the shift in revenue.
Correct that a lawsuit shouldnt affect MC, but it does if the company intends to pass those costs in the form of a price hike to the consumer. Their basic threat is to pass the cost of the lawsuit along to us, the consumer. They're just calling it a cost in that case, and if its spread such that a fraction of the cost is recovered for each unit sold, it has to be considered in marginal cost.
But yes, I completely agree that the only way they could pass it along is if they were charging below monopoly price. What many other posts on this topic seem to miss is that a monopolist cant "charge whatever they want" which is what I was trying to clarify. Sorry if I came off like an asshole, it wasn't targeted at you. I think that others do need to understand that monopolists have demand functions, even if they are rather inelastic.
Isn't that how it usually goes, though? Smaller firms are typically less rigid and can more easily innovate. If microsoft was the source of innovation but they still did all the anticompetitive activites they do currently, would you dislike them? As an economist, I'd have to say that I still would.
As far as them complaining that the fines hurt innovation, of course they'll say that. It doesn't make it true. In fact, it might help innovation. Their products become more expensive, so some people (even if just a few) move to an alternative, channeling more funds to a smaller "innovator". Let MS complain all they want.
I'm just posting the economics of it. Everyone else who posted what they thought were the economics of the case is simply wrong in their theory and application. Funny how I post correct economics but my posts get modded down to flamebait.
I agree. Until the penalty forces the company's hand, the court system has not done its job. Microsoft was found to be engaging in anticompetitive practices but obviously hasn't been punished accordingly. It'll remain the cost of doing business until they get fined heavily enough to change their strategy.
When the penalty for their practices is small enough, any company will absorb it as the cost of doing business. Antitrust suits are supposed to penalize a company such that they cannot continue the practice. It could be worse, in many other countries whose economies I've researched include bribes and kickbacks as cost of business. Over here, those are just political donations:)
Don't blame Microsoft, blame the courts.
You're missing something here. Where you said any increase in product price will decrease profits is absolutely incorrect. That depends on the price elasticity of demand for the specific product, which in MS Windows' case is highly inelastic. That means any increase in product price will increase profits. THAT's the basic economics you were looking for.
Here's some more basics to get you back on the right track. A monopolist maximizes price by producing quantity where marginal revenue (MR) equals marginal cost (MC), and charging the price determined by the demand function given quantity at MR=MC. Yes, I'm ignoring the competitive fringe, but that's to keep it simple. The case here is that microsoft's marginal cost has increased due to some fixed cost associated with a settlement. Thus, the intersection of MR=MC has changed, since MR has shifted upwards graphically. The result is a new monopoly price. This behavior isn't rent seeking at all.
I think you guys are overshooting the point. The only reason these additional costs exist is because MS is a monopolist. (Actually, they're a dominant firm operating alongside a competitive fringe, speaking economically).
If MS was anywhere from a price taker (perfectly competitive, rarely exists) to a loose oligopolist, they wouldnt have any additional settlement costs to pass onto their consumers.
The convenience store analogy is also not a good one, because convenience stores can be assumed to sell a homogenous set of goods, while MS is highly differentiated wrt its competitors.
It's something we'll all have to live with. MS has these costs not because they're a monopolist, but because someone decided to sue them for it and won. The penalty wasn't high enough to make Microsoft rethink its competitive strategy, just high enough to raise the selling price of its software. Maybe nobody should have sued them. That would've been the socially optimal outcome.
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$80 opening is overvalued given their limited financials they've released. See my post on inefficient markets :)
If anything, this research should prove that markets are NOT efficient. Even as the world's largest and best developed economy, we've yet to reach the efficient market (such assumptions as: perfect and uniform information, etc). It's not that I'm saying efficient markets don't exist, but I hope this Google experiment proves it. Honestly, they're not making enough profit to warrant a high stock price given their EPS. I'm very curious, though. The dataset from this experiment should look interesting. Is the author going to release it free of charge to academics? I'd hope so.
Well, I'd argue that while cars and bikes have gotten more stable at higher speed, drivers havent. The average driver is still a moron that doesn't know where the corners of his/her car are, eats while driving, and attempts to do all sorts of other shit behind the wheel. If only we could make drivers less dangerous...
Are you referring to the Nanomatrix? Some Nanoreincarnation of Keanu Reeves is sure to star in it years from now.
I'm also drinking coke.
Well, I suppose you're marginally better than doing all of the above and sniffing coke.
Don't we all? When a technology barely gets underway, everyone pours out their guesses as to how far it will be in 20 years. Remember Conan doing those "in the year 2000" sketches? I swear back in the 50's people thought we'd have flying cars by now!
Like any technology, the research dollars will probably go towards those projects with the highest expected returns. I might be a cynic, but rather than curing a disease, I'll bet we'll find a new flood of cosmetic upgrades.
Unfortunately, most firms will save a few clock cycles.. err, dollars to let the coder make the decision rather than hire a security expert. :) The average manager trusts his code staff simply because he knows no better, thus wont spend extra money on a "needless" consultant.
Yeah, its pretty sick when you can play with a previous working key and "make it fit". That might work on my 10 year old Toyota, but should NOT work on my secure data. Is this due to carelessness, though, or do we need better random generation capability to stop that threat? I remember seeing this before:
t angle/rng/
http://www.quantum.univie.ac.at/research/photonen
Basically, is it the coder's fault or the computer's fault? Maybe both?
Like the subject says, could carelessness in encryption have been a non factor even a couple years ago? Does the raw processing power on the average desktop make it that much easier to exploit a mistake or break weak encryption? In any case, I hope Winzip realizes "security" and "encryption" are more than just buzzwords.
Yep. Don't worry that you took the flash out to make this thing, the person you're lighting up will provide plenty of light. :)
You're exactly right. I posted the same earlier and nobody seems to want to hear it. MS isn't violating any economic principles, but are rather acting like any other firm in their position would. We still buy their software mainly because the network externalities associated with their OS force an inelastic demand curve.
While I agree, my counter would be that the fringe HAS to be more innovative, otherwise they have no ability to differentiate from the dominant firm which would probably stagnate their market share. They benefit from the dominant firm's adoption of their features, as some will recognize the source and at least try the product. I do agree, though, that MS can sit back due to its customer base. Especially in the operating system market, network externalities are rampant and may possibly be the single greatest barrier to a consumer switching platforms. Funny that classical economists still don't see network externalities as a barrier to entry. Could have fooled me on that one!
From an accounting standpoint, yeah, its a fixed cost. If you really believe that markets are efficient, MS will take a hit if they try to pass it on. I hope so, because there's developers out there who could use the shift in revenue.
Correct that a lawsuit shouldnt affect MC, but it does if the company intends to pass those costs in the form of a price hike to the consumer. Their basic threat is to pass the cost of the lawsuit along to us, the consumer. They're just calling it a cost in that case, and if its spread such that a fraction of the cost is recovered for each unit sold, it has to be considered in marginal cost.
But yes, I completely agree that the only way they could pass it along is if they were charging below monopoly price. What many other posts on this topic seem to miss is that a monopolist cant "charge whatever they want" which is what I was trying to clarify. Sorry if I came off like an asshole, it wasn't targeted at you. I think that others do need to understand that monopolists have demand functions, even if they are rather inelastic.
Isn't that how it usually goes, though? Smaller firms are typically less rigid and can more easily innovate. If microsoft was the source of innovation but they still did all the anticompetitive activites they do currently, would you dislike them? As an economist, I'd have to say that I still would. As far as them complaining that the fines hurt innovation, of course they'll say that. It doesn't make it true. In fact, it might help innovation. Their products become more expensive, so some people (even if just a few) move to an alternative, channeling more funds to a smaller "innovator". Let MS complain all they want. I'm just posting the economics of it. Everyone else who posted what they thought were the economics of the case is simply wrong in their theory and application. Funny how I post correct economics but my posts get modded down to flamebait.
I agree. Until the penalty forces the company's hand, the court system has not done its job. Microsoft was found to be engaging in anticompetitive practices but obviously hasn't been punished accordingly. It'll remain the cost of doing business until they get fined heavily enough to change their strategy.
When the penalty for their practices is small enough, any company will absorb it as the cost of doing business. Antitrust suits are supposed to penalize a company such that they cannot continue the practice. It could be worse, in many other countries whose economies I've researched include bribes and kickbacks as cost of business. Over here, those are just political donations :)
Don't blame Microsoft, blame the courts.
You're missing something here. Where you said any increase in product price will decrease profits is absolutely incorrect. That depends on the price elasticity of demand for the specific product, which in MS Windows' case is highly inelastic. That means any increase in product price will increase profits. THAT's the basic economics you were looking for. Here's some more basics to get you back on the right track. A monopolist maximizes price by producing quantity where marginal revenue (MR) equals marginal cost (MC), and charging the price determined by the demand function given quantity at MR=MC. Yes, I'm ignoring the competitive fringe, but that's to keep it simple. The case here is that microsoft's marginal cost has increased due to some fixed cost associated with a settlement. Thus, the intersection of MR=MC has changed, since MR has shifted upwards graphically. The result is a new monopoly price. This behavior isn't rent seeking at all.
I think you guys are overshooting the point. The only reason these additional costs exist is because MS is a monopolist. (Actually, they're a dominant firm operating alongside a competitive fringe, speaking economically). If MS was anywhere from a price taker (perfectly competitive, rarely exists) to a loose oligopolist, they wouldnt have any additional settlement costs to pass onto their consumers. The convenience store analogy is also not a good one, because convenience stores can be assumed to sell a homogenous set of goods, while MS is highly differentiated wrt its competitors. It's something we'll all have to live with. MS has these costs not because they're a monopolist, but because someone decided to sue them for it and won. The penalty wasn't high enough to make Microsoft rethink its competitive strategy, just high enough to raise the selling price of its software. Maybe nobody should have sued them. That would've been the socially optimal outcome.