Economics

from the Perspective of Competitive Advantage

by
Edwin B. Dean

According to Anon. (1989), economics is "the science treating the production, distribution, and consumption of goods and services or the material welfare of mankind." Obviously economics has to do with competition, and hence design for competitive advantage. As practiced, economics addresses the results of competition at system levels but does not address the factors, other than price and generalized customer utility, which drive competion. As practiced, economics does not address what drives price or customer utility. If it did, design for competitive advantage would be a subset of economics. Since it does not, economics weakly intersects design for competitive advantage. Triplett (1985) supports this perspective by noting that

It is not always clear whether economists believe that the output of an aircraft factory, say, is realistically described by the relatively simple mathematical expressions employed as production functions. But what matters is that those expressions suffice for the things that economists have traditionally wanted to do with them.

The one area of economics I have found to date that is truly and directly relevant to competitive advantage is transaction cost economics. The second area of economics I have found to be of value is econometrics. The techniques there are directly relevant to the measurements needed to quantify competitive advantage.

I strongly recommend that anyone who has a mathematical orientation and background begin their study of economics with Silberberg (1990). This should be be followed by Takayama (1974). Without a mathematical orientation, you should forget economics. With a mathematical orientation, but without out a mathematical background, you should sign up for economics and mathematics courses at the college or university of your choice.

References

Anon. (1989). Webster's Encyclopedic Unabridged Dictionary of the English Language, Gramercy Books, New York NY.
Silberberg, E. (1990). The Structure of Economics: A Mathematical Analysis, 2nd. ed., McGraw-Hill Inc., New York NY.
Takayama, A. (1974). Mathematical Economics, The Dryden Press, Hinsdale IL.
Triplett, J. E. (1985). "Measuring Technological Change with Characteristics-Space Techniques," Technological Forecasting and Social Change, Vol. 27, pp. 283-307.

Bibliographies

Economics Bibliography
Bayesian Econometrics Bibliography
Econometrics Bibliography
Transaction Cost Economics Bibliography

Surfing the Web

Economics Resources on Internet
Newsgroup: sci.econ
Newsgroup: sci.econ.research

Table of Contents | System Technologies | Use