Hello all,
No quotes today, nothing. BUT I have something even better, an amazing documentary that everyone should watch. Its about Ayn Rand, and the incredible influence she's had in America. In particular her relationship to Alan Greenspan, former chairman of the Federal reserve.
Anyways, I dont want to ruin the story for anyone, so I'm just going to post the link to the video... Did I mention that EVERYONE should watch this?
http://vimeo.com/27393748
Also, the documentarian, Adam Curtis, makes some of the best documentaries I've ever seen. So if you dig this one, look up his others.
Tuesday 3 April 2012
Monday 2 April 2012
Whooo, new poster, new post, new series.
Greetings fellow proles,
Looks like we're getting more people interested as using this blog as an outlet for all their thoughts and pontifications about economics. I like this alot and encourage as many submissions and reading of submissions as possible
Sara Wray, as she would like to be called, is going to start blogging about music and economics. This is an awesome idea as the whole music industry and the production of music is something that seems underdiscussed, but can be a great way to apply the 'crap' we learn in school to something that we care about.
dan,
and here it is:
The Market for Music: Is Music a Public Good?
In comparison to music I don’t really care about economics. Don’t get me wrong, I like equilibrium as much as the next person, but given the choice to read about interest rates or to just sit and listen to music I’m going to pick listening to music.
This has been problematic while trying to be an economics student, but this morning I woke up with an idea: why not start a blog section on music? Over the next little while I will be putting forward some ideas about the markets for music to see what you all think.
The first is based on a conversation I had with Dan L about public goods:
A pure public good is a good that is non-rivalrous and non-exclusionary. Non-rivalrous means that the cost of providing the same good to each additional consumer is zero. Non-exclusionary means that no one can be excluded from consumption.
The textbook example is fireworks. Once fireworks go off you cannot exclude someone close by from watching them, but it will not create additional costs if they indeed decide to.
In an age of digitalism, music is non-rivalrous. Distributing and downloading music over the internet is effectively costless.
Though personally listening to music is quite exclusionary (you can’t listen to what is in my headphones), there are many ways to listen to music that are not. The radio is a good example. If you have a radio you cannot be excluded from listening to any airwave you choose. The trend in fact is to move towards non-exclusionary ways of distributing music. These include podcasts, blogs, youtube posts by the artists etc.
So, is music a pure public good?
Though my above analysis comes with its flaws, music comes closer to being a public good than most things we think of as being one.
This means that without some kind of intervention, competitive pressures will lead to an under provision of goods.
Instead of the traditional horizontal aggregation of demand curves, the aggregate demand curve of a pure public good is a vertical summation of individual demand curves. That is, the quantity of a good stays the same and each individual can pay into it as they would like without changing g the quantity supplied. This is illustrated below.
The free rider problem arises. If one individual [person 3 perhaps] is willing to buy a song, other individuals [person 1 and 2] can take advantage of that and just download it, listen to it on youtube, the radio or a podcast for free. The music will be provided at MB3=MC and both person 1 and 2 will be able to consume more than they would if they had to foot the entire cost. But with an aggregate demand curve of MBi, indicating the marginal benefit to society, the point at which MB3=MC will be less than the socially optimal point G*.
So what can be done about this free rider problem? Governments need to be collecting and redistributing each individual’s willingness to pay for music in order to obtain G*. In other words, tax revenues should be used to subsidize music.
http://www.youtube.com/watch?v=_2DlJYQ1sdo
~ Sara Wray
Looks like we're getting more people interested as using this blog as an outlet for all their thoughts and pontifications about economics. I like this alot and encourage as many submissions and reading of submissions as possible
Sara Wray, as she would like to be called, is going to start blogging about music and economics. This is an awesome idea as the whole music industry and the production of music is something that seems underdiscussed, but can be a great way to apply the 'crap' we learn in school to something that we care about.
dan,
and here it is:
The Market for Music: Is Music a Public Good?
In comparison to music I don’t really care about economics. Don’t get me wrong, I like equilibrium as much as the next person, but given the choice to read about interest rates or to just sit and listen to music I’m going to pick listening to music.
This has been problematic while trying to be an economics student, but this morning I woke up with an idea: why not start a blog section on music? Over the next little while I will be putting forward some ideas about the markets for music to see what you all think.
The first is based on a conversation I had with Dan L about public goods:
A pure public good is a good that is non-rivalrous and non-exclusionary. Non-rivalrous means that the cost of providing the same good to each additional consumer is zero. Non-exclusionary means that no one can be excluded from consumption.
The textbook example is fireworks. Once fireworks go off you cannot exclude someone close by from watching them, but it will not create additional costs if they indeed decide to.
In an age of digitalism, music is non-rivalrous. Distributing and downloading music over the internet is effectively costless.
Though personally listening to music is quite exclusionary (you can’t listen to what is in my headphones), there are many ways to listen to music that are not. The radio is a good example. If you have a radio you cannot be excluded from listening to any airwave you choose. The trend in fact is to move towards non-exclusionary ways of distributing music. These include podcasts, blogs, youtube posts by the artists etc.
So, is music a pure public good?
Though my above analysis comes with its flaws, music comes closer to being a public good than most things we think of as being one.
This means that without some kind of intervention, competitive pressures will lead to an under provision of goods.
Instead of the traditional horizontal aggregation of demand curves, the aggregate demand curve of a pure public good is a vertical summation of individual demand curves. That is, the quantity of a good stays the same and each individual can pay into it as they would like without changing g the quantity supplied. This is illustrated below.
The free rider problem arises. If one individual [person 3 perhaps] is willing to buy a song, other individuals [person 1 and 2] can take advantage of that and just download it, listen to it on youtube, the radio or a podcast for free. The music will be provided at MB3=MC and both person 1 and 2 will be able to consume more than they would if they had to foot the entire cost. But with an aggregate demand curve of MBi, indicating the marginal benefit to society, the point at which MB3=MC will be less than the socially optimal point G*.
So what can be done about this free rider problem? Governments need to be collecting and redistributing each individual’s willingness to pay for music in order to obtain G*. In other words, tax revenues should be used to subsidize music.
http://www.youtube.com/watch?v=_2DlJYQ1sdo
~ Sara Wray
Subscribe to:
Posts (Atom)