Booms, Busts, and Recoveries Message Board

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Strategies & Market Trends : Booms, Busts, and Recoveries

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To: PMG who wrote (7057)	8/13/2001 12:25:24 PM
From: Moominoid	Read Replies (2) of 74559

I've really only come to that conclusion since studying business in order to invest. Certainly wasn't what they teach in undergrad or standard grad economics. I see a parallel between a fishery or other natural resource and ordinary competiitve markets. The econ textbooks all say that a fishery should be regulated because otherwise it will be overexploited, stocks will collapse and society will be worse off. But in the short-run consumers are better off (though producer profits are lower). Fish are cheap. They get more expensive later on. The dynamic analysis is appropriate. The same applies elsewhere I think. It is the the stock of knowledge that isn't built up leading products to be more expensive than they would otherwise be in the long run. This analysis shouldn't be hard now using the new endogneous growth theory. But most regulators and the like are just using their undergrad econ Farming is the classic case of a competitive industry that meets all the textbook assumptions. David

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