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14 votes

The supply and demand of Virtual Products

The book Information Rules by Google Chief Economist Hal Varian (with Carl Shapiro) deals with many issues raised by the particular features of the digital economy. In general, he finds you don't need ...
BKay's user avatar
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8 votes

The supply and demand of Virtual Products

Your broad idea is right. Since the marginal cost of reproducing digital goods is essentially zero, there is a sense in which is appears optimal to give the good to any consumer who has a positive ...
Ubiquitous's user avatar
5 votes

Is the use/consumption of natural resources considered an externality per se?

Use or consumption of natural resources is not in mainstream economics considered as an externality per se. First of all the quote from Mankiw is probably from undergraduate textbook and taken out of ...
1muflon1's user avatar
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4 votes
Accepted

Constant Returns in a Production Function $\frac{Y}{L}=\left(\frac{K}{L}\right)^{\alpha}\left(\frac{R}{L}\right)^{\beta}$ ($R$ = Resource)

The purpose of the paper under consideration is to examine/show the "investment rule" that leads to "intergenerational equity", which with constant population translates into constant consumption. ...
Alecos Papadopoulos's user avatar
4 votes

What would happen to the world GDP if we run out of minerals to mine but not of sources of energy?

You're correct that just because 1% of the economy is in mineral extraction, doesn't mean that stopping it would reduce global GDP by 1%. Similarly, roughly 10% of global GDP is on energy expenditure, ...
410 gone's user avatar
  • 8,168
4 votes
Accepted

What is the economic nature of water?

Most of the terms you mention are not mutually exclusive. Commodity is not a specialized term and it just denotes some (mostly) fungible economic good (see here or here). So water is a commodity. ...
1muflon1's user avatar
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3 votes
Accepted

What would Russia gain economically speaking if it conquered Ukraine?

Would Russia get richer or economically more powerful if it managed to annex ukraine? Likely not. Countries generally do not get rich by having a lot of natural resources. In fact it is often the ...
1muflon1's user avatar
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3 votes
Accepted

Subsidies as incentives

The claim is definitely not trivial, otherwise we would not observe frequent draughts due to government subsidies (like drought in California that is at least partially caused by bad water and farming ...
1muflon1's user avatar
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3 votes
Accepted

What is the relationship between the disciplines of Economics and Economic Geography?

I see both Economic Geography and Ecological Economics as different. Economic Geography is the study of the determinants and effects of the spatial distribution of economic activity. Economic ...
emeryville's user avatar
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3 votes

The supply and demand of Virtual Products

Someone still has to build the app or ebook. In other words, these products are characterized by large fixed costs of production and low variable costs. The marginal cost is positive because there ...
Nicolas's user avatar
  • 31
3 votes

Can the stock market show indefinite exponential growth?

To answer your question, one needs to know a little economics and a little physics. I only really know anything about the former. That caveat aside, stock market values and GDP are metrics that ...
Ubiquitous's user avatar
3 votes
Accepted

If Y=K+C, why the value of a marginal unit of capital is the same of the value of a marginal unit of output?

This is a single-good model, that is, output is of one good which can be either consumed or added to capital. The dynamic optimisation problem is to maximise the discounted present value of utility, ...
Adam Bailey's user avatar
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3 votes

How helpful is Hotelling's Rule in determining the price of oil?

It would be easy enough to subject the question to simple quantitative analysis - get the time-series of historical oil prices and away we go. Or, we can take a quick qualitative approach and get the ...
410 gone's user avatar
  • 8,168
2 votes
Accepted

Interpretation of the growth rate of consumption in a simple one-good model

I think you could have posted the question in a simpler manner. The exhaustible resource stock has nothing to do with the question. It is just the basic Euler equation in canonical Solow growth model. ...
optimal control's user avatar
2 votes

Interpretation of the growth rate of consumption in a simple one-good model

I got stock with this problem for days. The fact is that in a statical analysis, increasing $Q_K$ reduces consumption. But in a dynamic analysis, increasing $Q_K$ means more capital is saved and ...
Antonello's user avatar
  • 307
2 votes

What's an example of a resource, raw material that has become scarce?

Some examples you might consider: Fine art when the artist dies (this doesn't reduce the number of works by that artist, but does reduce the number of works that can be expected to exist in the ...
NickCHK's user avatar
  • 636
2 votes

The supply and demand of Virtual Products

Another way to look at this is that for many virtual products, users only use them once. No single person needs 2 copies of the same e-book. Thus there are many subscription style services for these, ...
jpa's user avatar
  • 430
2 votes

The supply and demand of Virtual Products

Joel Spolsky wrote an essay about this: https://www.joelonsoftware.com/2004/12/15/camels-and-rubber-duckies/ As he owns and runs a software developer company, his angle was "What price should I ...
Stig Hemmer's user avatar
2 votes

What are exactly considered resources in modern economics?

What I think you want to consider to be grouped with land, labour and capital is another factor to be considered with labor- technology (A.K.A "Knowledge*). The term "technology" here means an ...
Bensstats's user avatar
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2 votes

Is weak sustainability (Hartwick's rule) possible on a global scale?

First of all Hartwick's rule has originally been derived under rather specific assumptions, among others a Cobb-Douglas production function and constant population and technology. Therefore copying it ...
Maarten Punt's user avatar
  • 2,373
2 votes

Would a zero-growth economy with zero-growth population still have the same GDP?

Smith pointed out that as wealth was growing in any nation, the rate of profit would tend to fall and investment opportunities would diminish. Source The first half of the sentence makes it ...
Giskard's user avatar
  • 29.3k
1 vote

When does the law of diminishing returns apply?

Law of diminishing returns refers to profits or benefit per unit of output. This will inevitably decline, profits are defined as total revenue minus costs $\pi=TR-TC$ are thought to be increasing with ...
1muflon1's user avatar
  • 57k
1 vote

Is anyone familiar with the following basic resource sharing model?

This looks like a Tullock contest. I think in his model the prize from bidding (or putting in effort) is un-divisible, so $r_x$ will represent the probability of winning the price. But other than re-...
Regio's user avatar
  • 4,188
1 vote
Accepted

Hotelling rule and the shadow prices in a peg

Partial Answer I can give you an answer for parts (1) and (2). As for (3), I can't give an answer unless you show some work as per our site policy on homework questions. (1)These variables are ...
EconJohn's user avatar
  • 8,407
1 vote

Can the stock market show indefinite exponential growth?

It depends on what time scales you are talking about, but no. "The greatest shortcoming of the human race is our inability to understand the exponential function." -Albert Allen Bartlett, ...
Shane's user avatar
  • 473
1 vote

Is there anything wrong with the idea that resource depletion causes recessions?

A recession is a temporary drop in economic activity, while resource depletion is a structural factor. One could easily imagine resource depletion causing a permanent drop in the standard of living. ...
Brian Romanchuk's user avatar

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