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Showing posts with the label innovation

Decision Making as Output and Bounded Rationality

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  The classical economics theories proceed on the assumption of rational agents. Rationality implies the economic agents undertake actions or exercise choices based on the cost-benefit analysis they undertake. The assumption further posits that there exists no information asymmetry and thus the agent is aware of all the costs and benefits associated with the choice he or she has exercised. The behavioral school contested the decision stating the decisions in practice are often irrational. Implied there is a continuous departure from rationality. Rationality in the views of the behavioral school is more an exception to the norm rather a rule. The past posts have discussed the limitations of this view by the behavioral school. Economics has often posited rationality in the context in which the choices are exercised rather than theoretical abstract view of rational action. Rational action in theory seems to be grounded in zero restraint situation yet in practice, there are numerous restra
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Technology - Prosperity Linkages : Cause or Effect

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  Technophiles often equate technological adoption with increased prosperity. There is a sense of technological determinism detected by them. To these economic agents, technology provides a deterministic solutions to the global problems and thus enables the rise in prosperity. One might wonder a certain merit being detected in their argument. Prima facie, their arguments do sound impressive. For instance, the invention of the automobile has revolutionized transport and accompanying it were the network effects that enhanced growth. The increased growth certainly translated into a substantial degree of prosperity. There might be an argument on the degree of diffusion of prosperity or the relative shares in income by different socio-economic groups but what is undeniable is a reduction in poverty is something visible.   There are of course many others who argue that the technology has accentuated inequality across the global society. They tend to argue that technology does not further
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Kremer, Patent Buyout and Innovation

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The world continues to combat the Wuhan virus unleashed by China. The world at the moment grapples with two problems. The first is the efforts to discover a vaccine or a cure for the COVID-19 and the consequent distribution of the same to the global population. Secondly, it is to revive the economy which is suffering the lockdown. Theorists from Schumpeter onwards have viewed the restarting the economy being possible only through innovation. As the economy struggles, it is the new innovation that infuses life into the economy and enables it to build on the V shaped or U shaped or whatever shape the curve might posit itself to be.   Yet in the twin challenges that the society finds itself confronted with, lies a commonality and a challenge so as to speak. It is about innovation and protection of innovation and consequent prospect of monopolizing the innovation. Take the instance of a prospective discovery of vaccine or cure for the Chinese virus. The firm engaged in the discovery wo
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David vs Goliath, Big Tech and Schumpeter

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In technology industries, often the incumbent seeks to see off the challenges through an attempted blockage of technological progress. The radio industry led the top down development of television industry as visual extension of radio rather than an alternate medium thus hindering its progress for more than half a century. FM radio was literally crushed before it re-emerged in different context at a very different point of time. The crime of FM radio was given its inherent advantage over AM radio, it would have cannibalized the later. The AM radio industry had made significant legacy investment which would have gone begging. To protect their legacy investment against a raging Schumpeter they killed the FM industry or almost so.   The history of such technological battles for supremacy is replete with instances. In 1876, Western Union, ‘misused’ its monopoly in telegraphy, to ensure its candidate Rutherford Hayes get elected as President of United States of America. In fact, one
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Logic of Free Revealing of Information

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Erich Von Hippel in his splendid appraisal of innovation reasoned home innovation or user driven innovation constitutes a critical yet discounted component of the innovation process.   The users as they innovate in their ‘home’ or ‘office’ environment deliver valued service to the firms. Given the heterogeneity of needs, it is difficult for a firm to produce personalized or customized goods without a trade-off on price. Therefore the biome compels the users adapt the standardized offering by tinkering with these products to suit their localized contextual needs. In doing so, they emerge as lead indicators of the demand patterns for the goods and physiognomies of the goods. In a previous piece http://stalkingtheory.blogspot.com/2020/01/output-saving-and-digital-domain.html , quoting Lancaster, it was argued that the individualities of the good rather the good itself engendered utility to the user. Therefore, it is vital for the firms to decode the user needs thus making available th
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The Digital and the Market

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Internet, predictably, provoked the time-honored silhouette of business, government and society interfaces. Critics notwithstanding, pervasive digitalization, indubitably, is causative to geometric spread of organically evolved markets. The ubiquitous internet ecosystem, chaotic as it may seem, is trenchant in dismantling the sources of market failure. Changing Price Elasticity Price discrimination manifests itself from airfare differentials across portals; loan and deposit rate differential across banks and among customers of similar hue, inter-firm differentials in insurance premium, among others. Information asymmetry surfaces in consequence of cognitive costs of choice evaluation thus making the goods price inelastic. Sites like momondo.com, Google flights, policybazaar.com, paisabazaar.com, confused.com etc. by presenting a simple comparison of prices across firms reduce switching costs thus making products price elastic, consequently lower prices. Narrowing price dif
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Today's Imagination, Tomorrow''s Reality: Sci-Fi and Entrepreneurship

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Imagination with all its wildest possibilities yearn to be released from the human mind into actual reality. The expression of grammar of imagination might be story, visual, movie, art, audio, novel or oral conversation. The outcome however remains the same: far reaching, wild, perhaps bizarre, perhaps practically unimagined set of things that human might ever create and use. The outcome, to its progenitor might appear most marvelous, irrespective whether the public at lare perceive it to be crap or otherwise. Yet few might escape the crap trap and generate into hard core imagination underpinned science fiction expressed through visual, written or audio means.   Science fiction is best expressed as an output generated with infinite degrees of freedom for imagination. Science fiction is not a mere work of fantasy. Adventures and challenges endear to humans thus the foundation for visualizing a universe with those infinite challenges. Invariably, there exists a hero who conque
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