The Econ 101 of Agriculture

Wolfram Schenker from Columbia University gave a talk about the impact of climate change on agricultural production at ZEW. The part which struck me the most, I found out later, is part of a paper published in the American Economic Review (Roberts and Schlenker, 2013). Seems like I have a good taste… Continue reading The Econ 101 of Agriculture


The AncientBiotics Project

Just because recently I was so much into antibiotics on this page, here is a fascinating story about a research team from Nottingham which rebrewed a thousand-year-old recipe from medieval sources and found the substance to be highly effective against MRSA, a bacterium which is largely resistant to common antibiotic treatments. Usually I’m not a big fan of interdisciplinary research projects, as they are too often only a straw man, but these results are, as the researchers themselves put it, “absolutely astonishing”.

The fact that all ingredients alone, such as onion, garlic, and alcohol, show only a mild impact on bacteria growth but develop their true potential in the exact combination discovered in the 10th century puts into perspective theories (which were recently discussed elsewhere) that deny the medieval population the ability to make use of experimentation and the scientific method. In general, a lack of breakthrough inventions in science did not seem to be the problem throughout human history. It’s just hard to understand why such an invaluable knowledge like the invention of effective antibiotic treatments did not have a larger impact and spread to a wider geographical area. This channel of knowledge spillovers, the “standing on shoulders of giants” part of science, seems to have only opened up in modern times.

I can only recommend you to watch this video…

Beware of Trolls (Part 2)

Read the first part of this post, with an introduction into the business model of patent trolls, here!

Let’s get into the economics. Think of two companies, call them “Pear” and “Samson”, who are both active in the smart phone business and each making a profit of \pi_P = \pi_S = \pi.Pear But in their production process both firms risk to infringe a patent held by a troll with probability \theta. Choi and Gerlach assume that when a troll files a law suit and actually wins in court, he can extract a licensing fee of \pi/2, which results from bargaining with symmetric bargaining power (Nash solution). Continue reading Beware of Trolls (Part 2)

Beware of Trolls

Last week I was attending the MaCCI Annual Conference at our institute. There were a lot of bright ideas and interesting presentations. One of my personal highlights was Jay Pil Choi from Michigan presenting a model of patent trolls. There is no paper available yet but I found some slides online.* Patent_troll

Patent trolls are companies which acquire patents and which have the business model to sue other firms for patent infringement in order to make a profit on royalties or settlement payments. Continue reading Beware of Trolls

The Prize for New Antibiotics

I wrote about antibiotics before. So far, this was a success story. Since the 1940s, the price for antibiotic drugs fell extremely, transforming a once unaffordable drug into an “everyday product”. Unfortunately, however, there is more and more evidence that we might fall behind in the evolutionary battle against drug-resistant bacteria. Recently, I read an article in the NYT on the topic. The problem is essentially that developing new antibiotic drugs is not profitable anymore. Continue reading The Prize for New Antibiotics

Why is Apple sitting on a pile of cash?

Recently I stumbled over this picture on the internet. I have not checked the numbers, but everybody knows that Apple is sitting on a huge pile of cash (the same goes for Microsoft, by the way). Of course, this number makes a good conspiracy theory about what might really be going on in Cupertino. Is Apple the last fire-drake of California jealously hoarding a pile of gold in his lair? I would like to object. There are actually good economic reasons for Apple to have large cash holdings. Continue reading Why is Apple sitting on a pile of cash?