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Comments for Core Economics

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Last Build Date: Wed, 27 Sep 2017 06:07:27 +0000


Comment on Why would banks eliminate ATM fees? by derridaderider

Wed, 27 Sep 2017 06:07:27 +0000

Surely you've got this a bit the wrong way around. Its not so much that free use will cause fewer ATMs as much as demand for ATM withdrawals has fallen, leading to free use. With cards ubiquitous and more useable than ever people carry much less cash, and in any case can get cash fee-free with a paywave swipe at any supermarket. Having ATMs is simply much less profitable for the banks than it was, so making them free costs far less than it once would have. And if you do get rid of them your customers won't care anywhere near as much as they once would have.

Comment on Is cross-ownership a competition problem in Australia? by Casey

Sat, 08 Apr 2017 07:21:19 +0000

It is a bit more complicated than just looking at fund managers. For unitized product the decision to vote resolutions typically rests with the fund manager who is delegated that responsibility from the trust's Responsible Entity. In the case of discrete mandates, the fund manager will sometimes receive a delegation from the owner of the funds (e.g. an underlying superannuation fund) to vote the shares, but on other occasions the decision is referred back to the owner of the funds. Even where a fund manager holds a delegation (to advise the custodian) how to vote the shares, that delegation involves an agreement with the owner about "how" (as in guideline) the shares are to be voted, and when the owner must be consulted prior to issuing a voting instruction. For the great bulk of commercial decision making, I seriously doubt that cross-ownership plays any role. However, there are some areas where the concentration of ownership in a small number of superannuation funds (and fund managers) does create problems, particularly in the small Australian market. The most serious issue arises in the pricing of IPO's and share placements. Prior to launching a deal, issuing companies and their investment bankers typically do what are euphemistically called "sounding" of the large shareholders in the sectors, or in the case of placements they do "soundings" of large existing shareholders. Even if all confidentiality is maintained, pricing gets set by very few investors. It is too easy (and perhaps idle) to speculate, but any leakage of confidential information is big problem, and difficult to prove. The specific issue with the Australian banks and their obscene ROE's is that they have become such a large chunk of everyone's retirement funds that politicians have become scared and paralyzed to do anything about their outrageous behaviour. The most recent round of increases in the mortgage rate spread must rank as one of the best example ever of tacit cooperation among non-competitors. (Abetted of course by regulatory guidance - enough said).

Comment on Is cross-ownership a competition problem in Australia? by harryclarke

Thu, 16 Mar 2017 20:42:48 +0000

Vanguard mainly a passive index fund investor. Blackrock is both active and passive offering a lot of ETFs. A lot more work is necessary here to conclude anything about concentration and overlaps. These observations true for the US as well as Australia.

Comment on Is cross-ownership a competition problem in Australia? by Ben

Thu, 16 Mar 2017 15:09:37 +0000

How much of these ownership percentages are due to the fund managers investing due to passive investment mandates (I.e. Constructing portfolios to replicate market index) versus active investment mandates where concerns about impacts on company decision making might be more legitimate?

Comment on Will pricier soda lead to slimmer waistlines? by Gordon Travers

Thu, 23 Feb 2017 23:45:17 +0000

I have always been dubious about a sugar tax. The major brands dominate the market. They are able to extract a price far in excess of what would be predicted by classical economics. Increasing the price slightly by a sugar tax would not have that much effect. The behavior of this market is much better explained by Behavioral Economics, rather than classical economics. It would appear to me that controlling the advertising would have better results, but is much harder to implement. I would suggest that our society introduce the concept of products and services that are legal, but undesirable. Included in this category would be prostitution, drugs, smoking and gambling. These products and services would not be able to be advertise, the supply would be regulated, and there would be public health campaigns to reduce usage.

Comment on Will pricier soda lead to slimmer waistlines? by nottrampis

Thu, 23 Feb 2017 03:17:59 +0000

low income people smoke more and drink more alcohol. you have a strange looking demand curve. If low income people gradually react to an inelastic demand curve why would they not react pretty quickly to a normal demand curve?

Comment on Will pricier soda lead to slimmer waistlines? by Andreas Ortmann

Thu, 23 Feb 2017 01:07:16 +0000

Another good read here; sugary drinks are certainly part of the problem (so I do not see a problem with a tax, that seems standard use of economic incentives), as is junk food more generally, and for that matter lack of physical activity:

Comment on Tot ziens Australie! by cebeci çilingir

Sun, 19 Feb 2017 15:59:37 +0000

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Comment on Tot ziens Australie! by Sokullu çilingir

Mon, 09 Jan 2017 13:42:00 +0000

Very nice content thanks

Comment on Tot ziens Australie! by Mebusevleri çilingir

Sun, 01 Jan 2017 15:58:27 +0000

Thanks admin nice content