Friday, February 19, 2010

Economics of Cooperation

Summary: Free publication.

A recent article in the Economist discussed how business models are more collaborative. In the World is Flat, Thomas Friedman, explains how software allows use to collaborate with others around the world while you are sleeping. Just what are the economics of cooperation? The Dallas Fed has a publication here. The publication could be used to show how comparative advantage maximizes the benefits from trade.

Mark Perry posted an blog about the number of women graduating from college with advanced degrees. His post showed that women now outnumber men and the trend will continue as men prefer jobs that use their hands. One of the arguments I hear is that women are innatelly different than men in the way they work. As the argument goes, women are able to build consensus, are less aggressive, and are concerned less about ego than men. So it's likely that women will chair top companies and use a collaborative business model.

In developing my iPod app, Econexamcram, I used Skype to work with programmers in India. In designing my new web page, I used PayPal to find a programmer online. I am collaborating with others who specialize in the areas I want and we are trading based on our comparative advantage. This is what economics teaches.

In working with others from around the world, I have learned that the comparative advantage is dynamic. When changes occur in the market place, such as the new e-book readers, the comparative advantage shifts. Working with others requires communication and technology skills in order to survive.

About the Author: Mike Fladlien is an AP Economics teacher from Muscatine High School in Muscatine, IA. He is an author, and also publishes the Mikeroeconomics and iMacroeconomics VB blogs.


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