Thursday, June 09, 2005

'Clearly, not all capital is fixed and immobile' :: The Eclectic Econoclast

A great tale of the economic forces at play when there is a temporary increase in demand. As long as suppliers have some forewarning of increased localized demand and are rewarded for responding, consumers don't have to rely entirely on peak load pricing to allocate resources. But if the industry isn't rewarded for holding capacity that will be idle much of the time, we can imagine the consequences.

EcEc concludes:

Let's face it, we humans are a pretty asymmetrical bunch when it comes to understanding opportunity costs.
At the Dubai World Cup the organizers lay on additional facilities to handle the large crowd. They aren't singles, though, but posh trailers like the Emerald Oasis shown here.


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