26.11.2012 - Micro stars, macro effects: Meet the economists who are making markets work better
On the face of it, economics has had a dreadful decade: it offered no prediction of the subprime or euro crises, and only bitter arguments over how to solve them. But alongside these failures, a small group of the world’s top microeconomists are quietly revolutionising the discipline. Working for big technology firms such as Google, Microsoft and eBay, they are changing the way business decisions are made and markets work. Take, for example, the challenge of keeping costs down. An important input for a company like Yahoo! is internet bandwidth, which is bought at group level and distributed via an internal market. Demand for bandwidth is quite lumpy, with peaks and troughs at different times of the day. This creates a problem: because spikes in demand must be met, firms run with costly spare capacity much of the time...............................................Full Article: Source