The recent terrorist attacks in Kenya and Pakistan have reinvigorated the worldwide fear of extremist violence. The far-reaching effects of these tragic events have substantial impacts on the way people choose to live their lives. Terrorism induces fear. This natural human reaction causes subjective beliefs and reality to diverge. Exploring the consequences of terrorism is a challenge for economists, especially with regard to the effects on rationality, consumption and economic behaviour.
Through our life as an economics major in undergraduate school, for three years we are repeatedly bombarded with consumer and producer theory, game theory, and general equilibrium theory. It is not until we are very familiar with these different topics, do we then come across what is, in my opinion, one of the most interesting topics in microeconomics. Auction theory and mechanism design.
Freshly built from government stimulus funding, the new district of Kangbashi in the city of Ordos in China is brimming full of sky high apartments and shiny new infrastructure. Yet since its construction the town remains largely uninhabited and untouched.
It is known as ‘the ghost town,’ with only about 30,000 residents despite a housing capacity of one million. Few residents have chosen to move from the thriving old city district in Dongfeng just 30km away.
In microeconomics, the first thought that springs to mind when we talk about perfect substitutes is Coca-cola and Pepsi. Since these two essentially taste the same and have similar pricing, we would expect that demand for both products are similar. However, until recently, the market share for Coca-cola and Pepsi has heavily favoured Coca-cola in Australia. It is estimated that Coca-Cola outsells Pepsi Cola by around three times in Australia and New Zealand supermarkets, and around five to six times in the whole cola market.
Day 2 of the ACE Conference started with a keynote speech from Professor John Quiggin of University of Queensland on the conference’s main theme ‘The future of economics: research, policy and relevance’.