100 Economics Question of the Day: An Intermittent Blog: Crack and Technology as Business Models

Friday, August 19, 2005

Crack and Technology as Business Models

The Freakonomics blog references some interesting work on the history, growth, and ultimate stabilization of the crack "market," including the paper by Fryer et al. that forms the basis for the chapter in Levitt and Dubner's eponymous book, as well as this paper by Alfred Blumstein that explicitly considers crack in the sense of the traditional business model.

Indeed, crack fits the model well: introduction in 1985, peaked in 1993. The standard eight-year business cycle that was taught in B-schools and MBA programmes for decades.

Given that, why do people continue to believe that technology companies should be evaluated as if their "growth period" should be based on a 10- or 15-year time horizon?

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