Commodities & Markets

Transcription

1 1 / 15 Commodities & Markets Steven O. Kimbrough Operations and Information Management University of Pennsylvania

2 2 / 15 Important properties of commodities Commodity: stuff, anything, that has value. Aka: good (and bad). Commodity a (more) neutral term. Can be concrete or abstract, physical or social. A material thing, a service, an obligation, a right, etc. Think: The number of hours per year spent torturing innocent children for purposes of entertainment. A commodity, but not a good one. Will look at properties, attributes of commodities. Each comes in degrees, is present more or less. These are newer concepts in our language (yea science!) and so have ugly (not deeply entrenched) names. Sorry.

3 3 / 15 Excludability property For a given commodity, how easy or difficult is it to restrict access and use of the commodity? Easy: your private property, e.g., clothes, food, place of residence. More difficult: your job, your know-how. Difficult: the atmosphere, national defense. What about policing and crime prevention, street cleaning and garbage pickup, primary and secondary education? What is or is not an excludable value, and what it is worth, is often a subject of contest. Contestable and contested.

4 4 / 15 Subtractability property For a given commodity, does using it, taking advantage of it lead to a high reduction in its value to others or to a low reduction in value to others? High subtractability commodities: your private (material) property. Also said to be rivalrous. Low subtractability commodities: the atmosphere, national defense, knowledge and know-how, information. (And see discussion of excludability.) Also said to be non-rivalrous. Often seen as low, at least to a point: use of a bridge or highway. If crowding is an important factor, then the commodity has high(er) subtractability. If or when.

5 5 / 15 Excludability subtractability framework Compare with [Ostrom et al., 1994, page 7], also [Ostrom, 2005]. Excludability Subtractability Low High Easy Toll or club Private goods goods Difficult Public Common-pool goods resources

6 6 / 15 Excludability: easy Excludability Subtractability Low High Easy Toll or club Private goods goods Difficult Public Common-pool goods resources High subtractability: thought to be relatively unproblematic with respect to market provision; individual owners, who should dispose of these commodities as they will. (Worry: negative externalities.) Low subtractability: makes sense to let many people use these commodities, since use is not subtractable; charge for use, e.g., toll roads and bridges. Expect adequate market provision.

7 7 / 15 Excludability: difficult Excludability Subtractability Low High Easy Toll or club Private goods goods Difficult Public Common-pool goods resources High subtractability: this is the problem of the commons. Must it end in tragedy? How to prevent exhaustion of the resource? Problem: market over-provision and collapse. Low subtractability: public goods, such as defense, broadcast radio and TV, air. How to pay for these commodities? Problem: market under-provision. Important factor: N, the number of agents involved.

8 8 / 15 Locality property Related concept: externality (positive or negative). Distinguish: agents/players/actors versus stakeholders. Actors: make decisions that affect outcomes and rewards obtained. Stakeholders: need not make (relevant) decisions, but are affected by the decisions that actors make. Locality: broad or narrow. If narrow, then all stakeholders are actors. (Small # stakeholders B ) If broad, then many stakeholders are not actors. (Large # stakeholders B ) Examples of stakeholders who are not actors?

9 9 / 15 Numerosity property How many agents (players, actors) are we talking about? System behavior with two will usually be very different than with 6 and than with Generally, cooperation is more difficult to achieve and maintain as numerosity increases. What else?

10 10 / 15 Towards a framework The suggestion here is that when modeling and analyzing contexts of strategic interaction, these properties (among others) are important to attend to: 1 Subtractability (of the goods, commodities at stake) 2 Excludability (of the goods, commodities at stake) 3 Locality (of the agents, of the stakeholders) 4 Numerosity (of the agents) Examples?

11 11 / 15 Can we map this framework to services? Excludability about Locality, and Numerosity? Subtractability Low High Easy Toll or club Private goods goods Difficult Public Common-pool goods resources What

12 12 / 15 Action arena framework [Ostrom et al., 1994, page 29] An action arena is composed of and... An action situation involving Participants in Positions who must decide among diverse Actions in light of the Information they possess about how actions are LInked to potential Outcomes and the Costs and benefits assigned to actions and outcomes.

13 13 / 15 Action arena framework [Ostrom et al., 1994, page 29] An action arena is composed of Actors, the participants in action situations who have Preferences, Information-processing capabilities, Selection criteria, and Resources. So, lots of boxes to tick off. Can we map them to services?

14 14 / 15 Ostrom, E. (2005). Understanding Institutional Diversity. Princeton University Press, Princeton, NJ. Ostrom, E., Gardner, R., and Walker, J. (1994). Rules, Games, & Common-Pool Resources. University of Michigan Press, Ann Arbor, MI.

15 15 / 15 $Id: commodities-markets-beamer.tex :20:39Z s