Tag: Economics

E-Commerce Economics Are Broken, Says Tech Startup Tradeswell. It Has A Plan To Help Fix Them.

Paul Palmieri was looking at various direct-to-consumer startups as possible investments for his venture capital fund when he decided the e-commerce economics didn’t add up.

“I definitely saw a lot of opportunity to invest in direct to consumer brands, but every time we would get close, we would look at it and say, gosh, the numbers are somewhat broken,” he said.

While the sales potential is great, the fees brands pay to what Palmieri calls the ecosystem of e-commerce enablers—for advertising, for keywords, for warehousing, for fulfillment—are destroying margins.

So instead of investing in a DTC brand, Palmieri decided to invest in starting a company that would help brands large and small master the new math of e-commerce.

The company, Tradeswell, emerged from stealth mode last week after beta

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The $120 Billion Idea Behind This Year’s Nobel Prize in Economics

(Bloomberg Businessweek) — You know that feeling of elation when you win an auction—say, a bidding war for a house—and how it’s immediately followed by that sinking feeling that you overpaid? That’s the winner’s curse. It’s a real thing. Once you stop to think, you realize there’s probably a good reason other people weren’t willing to pay as much as you did. By winning, you just lost.

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Understanding the winner’s curse, and how to avoid it, is part of the reason Stanford University economists Robert Wilson and Paul Milgrom won this year’s Nobel Prize in economics—formally called the Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel (PDF).

Wilson’s and Milgrom’s work is unusual in that it’s both theoretical and highly practical. The U.S. Federal Communications Commission raised more than $120 billion for taxpayers from 1994 through 2014 by selling off wireless frequencies using an auction

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Nobel Prize in Economics awarded to Paul Milgrom and Robert Wilson of Stanford University

“Their discoveries have benefited sellers, buyers and taxpayers around the world,” the prize committee said.

The men were honored for theoretical insights into developing the best rules for bidding and for establishing the final price. The resulting improvements in auction formats have proven especially useful in auctioning off goods and services that are difficult to price using traditional methods, such as radio frequencies, the committee said.

Wilson, 83, was cited for theoretical research that explored “the winner’s curse” in auctions of goods that ultimately had the same value to all potential buyers, such as minerals in a specific geographic area. He developed a theory explaining the tendency of successful bidders to place bids lower than their own estimate of the item’s value to themselves or other buyers, because they feared paying too much.

Milgrom, 72, drew the nod for developing a more general theory of auctions involving values that vary

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Economics Award Caps Week of Nobel Prizes | Business News

STOCKHOLM (AP) — The winner of this year’s Nobel Prize in economics will be announced Monday, coming as much of the world experiences the worst recession since World War II because of the impact of the coronavirus pandemic.

The award caps a week of Nobel Prizes and is technically known as the Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel. Since its establishment in 1969, it has been awarded 51 times and is now widely considered one of the Nobel prizes.

Last year’s award went to two researchers from the Massachusetts Institute of Technology and a third from Harvard University, for their groundbreaking research into efforts to reduce global poverty.

Few economists could have predicted last fall that the globe would come to a virtual standstill within months, as governments closed their borders, imposed lockdowns and ordered other measures to stop the spread of COVID-19, triggering a

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Debt may be cheap, but the UK’s poor productivity will cost us dear | Economics

The strangely easy agreement between economists of right and left that the chancellor should set aside concerns about Britain’s rising debt levels still holds seven months after the first Covid-19 lockdown was imposed.

Thatcherite free-market thinktanks sing the same carefree song as Keynesian academics when debate turns to the size of this year’s public spending deficit. There are differences in tone and it goes without saying that all would want money spent wisely, but their efforts focus on competing proposals for growth.

If only that were true inside the Tory party, be that members or backbenchers. Listen to what they say about the economy, and it is like the 2008 financial crash never happened. Public sector spending is still being likened to a household’s finances, where the aim must be a balanced budget.

Even worse, the household analogy has another group of subscribers and they sit inside the Treasury.

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