Competition in the Digital Age
A firm in a “pick and shovel” market produces a good or service that serves as an input to other businesses. A “frontier” pick-and-shovel supplier has made a significant technical breakthrough in applied science or engineering that has enabled capabilities in its product previously considered impractical, uneconomical, or impossible. Pick-and-shovel markets have been around for …
From a firm’s perspective, the emergence of a new technology wave is a new opportunity to generate a financial return. The question is precisely how. That topic remains as salient today, in the era of artificial intelligence, as it was when firms first encountered smartphones, the commercial internet, and personal computers. Before we fully embrace …
What can a nineteenth-century economist teach a twenty-first-century Chief Executive Officer (CEO) at one of the largest technology firms? More to the point, why is Microsoft's CEO, Satya Nadella, quoting William Stanley Jevons? Jevons was a dominant figure in economic thought in Britain during the second half of the nineteenth century, but not today. His …
Continue reading "Artificial Intelligence and the Jevons Paradox"
Epiphany plays an outsized role in the reductionist two-step model of invention. Step one is when an idea pops into an inventor’s head, and step two is when the invention spreads in an economy over time. This model is misleading in numerous ways that would take a book to enumerate. Today’s column focuses on step …
Continue reading "Spillovers, Bottlenecks, and More Invention After Invention"
It is that time of year again: Time to look back at information technology in 2024 and make light of it. As with prior year-in-reviews, this one will be arranged like an award ceremony. There are three criteria for the dozen awards given out this year:• The award must be for something involving digital technology.• …
This year's Nobel Prize in Economics has been shared by Bill Nordhaus and Paul Romer for "integrating innovation and climate with economic growth." That is one way to thread the needle to link these fine recipients and I applaud the Nobel Committee for finding a way to do it. That said, there is a real …
Continue reading "A Nobel Prize for Breaking Through Hurdles Placed by Economists"
It is 10 years ago today that the most significant consumer technological innovation, possibly of the last 50 years, was introduced. Here is Steve Jobs introducing it: If you have never seen it, you should watch. The original iPhone is a shadow of its counter-parts today. But the design is essentially the same. All mobile …
From what I can gather from several recent articles, many serious pundits have arguments with the views of ‘techno-optimists.’ A techno-optimist appears to be somebody who has blind faith in the power of technology to cure all ills, and particularly, to create economic growth. (See e.g., here, here, here, here, or here, and there are many more...) …
Continue reading "Ten Open Questions for the Techno-Optimist"
Human existence changed irreversibly after the invention of indoor plumbing and the municipal supply of water and sewage. The advent of electricity also changed life as we know it, and so did automobiles, the telephone, penicillin, pasteurization, the polio vaccine, and much more. In his book, The Rise and Fall of American Growth; The US …
We don't speak of it very often but economists face a fundamental challenge with respect to innovation: if innovation is something no one has anticipated, then the (Savage) axoims upon which we base our rational choice decision-making cannot apply. Let me explain. Decision-making is all about actions and their consequences. Leonard Savage created the framework …
Continue reading "Adult Colouring Books Remind us that Innovation lies outside economics"
Digitopoly 