The irony is that employees, who are paid at a discount to consultants, can't do what the very thing consultants are nototrious for: charging you top dollar for your competitor's know-how, and then selling your firm's know-how to the next highest bidder.
Perhaps you've never heard of Intel's Global Virtual Factory? It's been in operation for over a decade. Engineers in countries across the globe work on identical manufacturing lines, solving the same problems and then, as the sun sets, handing them off westward to the next cohort.
Besides, how could you begrudge Israel with all of it's intellectual talent and its status as a US territory?
Wasn't 15 years ago we were lamenting the same things about Japan overtaking the US? They were buying the US like dollar DVD's on Ebay.
It may seem inevitable that China outpaces the US and we can count the reasons. So hard working, desperate wedge between the rural undersociety and the city people, 1 billion people. But there are a lot of structural obstacles they still must come to grips with. At 8% growth, it will take decades to bring the countryside out of poverty. Helping those folks along will be a boon for everyone.
Besides, a funny thing happens when an economy succeeds: it's harder to get people to work hard and you have to pay them a lot more, eventually undermining some of the determinants of early success.
As Nova says, China may become the biggest worldwide exporters of products, but the US remains the biggest exporter of lifestyle. And if China, albeit sadly, commercializes like the US, they will be the kick ass partner we wanted Japan to be.
But, with history in the rearview, we know their ascension is far from a slam dunk.
The applications of options to this problem is sexy, but misguided.
A simpler and more effective approach is that of simple two-part pricing, which extracts more customer surplus (=value-price) than a single price does. One neither pays the "COST" nor the "VALUE" of the object, but something in between. No market is purely competitive (price=marginal cost), nor purely monopolistic. For more info:
An alternative and equally simple way is to treat the maintenance costs as insurance. One loses money in expected value terms by buying insurance, but avoids really catastrophic possibilities.
Pleeze lets not go back to 101. One neither pays the cost nor the value, but someplace in the middle based on fancy factors such as the relative market power of the buyer and seller. That's where all the fun of branding, future promises, and technology lock-in come into play.
And in terms of Econ 101, licensing + maintenance is standard two-part pricing designed to accrue customer surplus for any firm. See any textbook as to how this works.
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The irony is that employees, who are paid at a discount to consultants, can't do what the very thing consultants are nototrious for: charging you top dollar for your competitor's know-how, and then selling your firm's know-how to the next highest bidder.
Perhaps you've never heard of Intel's Global Virtual Factory? It's been in operation for over a decade. Engineers in countries across the globe work on identical manufacturing lines, solving the same problems and then, as the sun sets, handing them off westward to the next cohort. Besides, how could you begrudge Israel with all of it's intellectual talent and its status as a US territory?
This research is funded by the Transportation Authorities to scare you into you purchasing hands-free kits.
It may seem inevitable that China outpaces the US and we can count the reasons. So hard working, desperate wedge between the rural undersociety and the city people, 1 billion people. But there are a lot of structural obstacles they still must come to grips with. At 8% growth, it will take decades to bring the countryside out of poverty. Helping those folks along will be a boon for everyone.
Besides, a funny thing happens when an economy succeeds: it's harder to get people to work hard and you have to pay them a lot more, eventually undermining some of the determinants of early success.
As Nova says, China may become the biggest worldwide exporters of products, but the US remains the biggest exporter of lifestyle. And if China, albeit sadly, commercializes like the US, they will be the kick ass partner we wanted Japan to be.
But, with history in the rearview, we know their ascension is far from a slam dunk.
A simpler and more effective approach is that of simple two-part pricing, which extracts more customer surplus (=value-price) than a single price does. One neither pays the "COST" nor the "VALUE" of the object, but something in between. No market is purely competitive (price=marginal cost), nor purely monopolistic. For more info:
http://en.wikipedia.org/wiki/Two-part_tariff
An alternative and equally simple way is to treat the maintenance costs as insurance. One loses money in expected value terms by buying insurance, but avoids really catastrophic possibilities.
The options explanation is truly overblown here.
And in terms of Econ 101, licensing + maintenance is standard two-part pricing designed to accrue customer surplus for any firm. See any textbook as to how this works.