Sunday, May 18, 2008

The Economics of Just-Do-It

What is someone told you that the price your favorite candy (mine is Polo mint) will go up significantly in two week? Most candy-cholic will buy more and stock some of the candy. It is legal and the rational things to do.

But what if many people also want to stock the candy? And after a while the seller of the candy also stock and hoard the candy. That’s mean you can only buy a few or not at all.

So who benefit from the knowledge of upcoming price increase? Those with the most access and money to buy candy and sell it later. It is a sure profit since the price will be increased for sure. Not sound so pro-poor to me.

Sometime the best things to do are to just do it. Planned well and prepare all the administrative/organizational detail, then make the announcement. Information are not always best when they are disseminated early. Even Stiglitz will approve that asymmetric information in some cases make better output than (almost) perfectly symmetric information

Change candy to fuel (both are addictive and hard to live without). And you got to read things like this in the newspaper.

1 comment:

fajar said...

salam kenal