Problem:
Do some research on a topic known to economists as the 'friction-free' or 'low-friction' economy. Early writers on this topic foresaw many of the seismic shifts that have occurred in the market place over the past one to two decades. Some of these early writings on 'friction' discussed many of the business tools we now think of as either commonplace or even obsolete. It is sometimes hard to imagine that businesses once embraced overnight mail, inexpensive fax machines, and email as being as monumental as we now think of business web sites, smart phone apps, Facebook, business portals (such as Amazon), and Google. The business tools becoming available may have been different, but the impacts on business strategies were dramatic. Once you have done your research, tell your classmates what you found, where you found it, and who the authors of the material are.
Next, tie the idea of a friction-free or low-friction economy to the concepts of demand and supply, and demand elasticity , two major topics in Managerial Economics. Some ideas that might be debated include, but are not limited to:
What is the connection or correlation between the amount of 'friction' in an economy and demand and supply? Does a relationship even exist? How can we quantify the relationship?
As friction in an economy decreases or increases, how is the demand for a firm's product or service impacted (does anyone remember when a traveler contacted a travel agent instead of Kayak for an airplane ticket, and the ticket was printed and presented to board a flight?)? Does it increase? Does it decrease? How can we measure the impact? How does the elasticity of demand for a firm's products change, if it does change? Are all firms impacted the same? Why or why not?
Is there an integral connection between friction in an economy and elasticity of demand? Why do you believe there is, or why do you believe there is not? If there is a connection, what is it? Can we measure or specify the relationship? If yes, how do we do so?