Monday, August 31, 2009

Cheung's Theorem

"The havoc that inflation or deflation would cause is negatively related to the degree of freedom individuals in an economy enjoy in choosing contractual arrangements that best fit their interests."

This is from Professor Steven N S Cheung's column (in Chinese) today. Read more here.

Wednesday, August 12, 2009

Raising Rival's Cost, Yummy Edition

According to a report in the latest edition of Businessweek:

"Rather than wait to be forced into caloric transparency, Yum! Brand is embracing it. The Louisville company, owner of KFC, Taco Bell, Pizza Hut, Long John Silvers, and A&W, has pledged to post calorie counts at its 3163 corpoate-owned locations nationwhile by 2011..."

Why Yum! Brand active attitude towards mandatory calorie disclosure, you ask.

Well, the answer is this:

"Yum is also helping to lead a lobbying effort in Washington to extend any federal law to stand-alone restaurants."

And why is this bad?

The story goes on to reveal the answer:

"The National Restaurant Assn. says calculating calories may be too costly for small restuarant owners."

In other words, Yum's lobbying effort would help raise its rivals' costs and drive them out of the businesses not because Yum is better at what it should be good at, delivering good food at lowest possible cost. But because Yum is far better in lobbying than its rivals.

The whole story is here.