A McKinsey economist tells us why economists’ thinking is important to business. Not all economists are academics– many toil in business areas. Most of what Robert Litan talks about is partially microeconomics and partially behavioral economics. We have to learn to combine the two.
Economists: Don’t leave home without one | McKinsey & Company.
Posted in Managerial Econ, Microeconomics
Tagged deregulation, priceline, transportation
When is an alliance too big? Here’s a possible example. Some members seem to be doing well, but others are losing out. And the deal lasts only till 2016.
G6 alliance members hit choppy water as they struggle to find tradelane synergies – The Loadstar.
Coalitions are always tricky because they lose their advantage when some members drop out. On average the deal might make sense. But life is stochastic– random fluctuations can cause some of the members to suffer while others prosper. And these specific realizations of events may cause participants to wonder if it’s to their advantage to continue. Add a short contract time, and where’s the motivation to stay in the coalition?
It is so hard to form these coalitions that they need to be thought through carefully beforehand, and attention paid to how the random fluctuations will be handled.
Moshe Dror and I have a series of papers dealing with such problems in the inventory pooling context, but cooperative games are equally applicable in any pooling of resources.
Tank cars aren’t safe enough to carry oil, and explosive train wrecks will result. And by the time we build them, will the oil boom become a bust, and the cars won’t be needed? Or will new pipelines reduce the need for this mode? Where should our transportation infrastructure capital be spent? Should oil be going in trains anyway?
Supply Chain Digest Port Technology International Marine Link
US safety board: Oil train tank cars need upgrades
