Monday, June 9, 2008

Economic Effects of Euro 2008 (in Malaysia)

Economic effects from Euro 2008

  1. Fall in productivity. Overall productivity of workers may be affected through two channels. First, late arrival means lesser work being done on the same day. Even those who are punctual, may not be able to perform their task as efficient as before due to tiredness
  2. Increase in the costs of production for firms. From economic viewpoint, lesser work done means a possible increase in operating costs for the month of June. Why? Simple. Costs are being spread over a smaller range of output
  3. Negative externalities to colleagues & road users. If there are urgent tasks that must be completed within the same day, the affected worker may sought help from his colleagues. Another angle to look at this will be, tiredness that may contribute to accident statistics while driving
  4. Surge in profits for Mamak operators. Definitely there will be larger audience & customers this month. Some may come as early as 1 or 2 hours before the game started just to ‘fight’ for a comfortable spot
  5. Some businesses may take this opportunity to market their new products. I could recall that Proton advertise its Satria Neo aggressively during 2006 World Cup. The scenario differs in country like UK. Brewery firms like Carlsberg will see a rainfall of profit due to an extraordinary demand. In Western, alcohol drinks & football matches are complement goods
  6. Bookies will be better off. Illegal betting means there will be some minority that make a fortune in this month at the expense of those majority unfortunate ones
  7. For students who are sitting for major examination e.g. A Levels in the month of June, this will be a great month of distraction. Results of the exam will not be that favourable at the end of day if there is no proper time allocation


1. One could argue that fall in productivity will be less significant, if one has enough sleep before staying up late at night. Example if the match starts at 2:45am, one could have taken a rest in between 8:30pm to 2:30am & that is 6 hours sleep. Also it could be argued that if someone stays back late in the office after official hours, wouldn’t it compensate for the lost of output initially due to lateness?

2. Working adults with commitments will actually will be more likely to concentrate on their jobs & careers. Few could have chosen to stay up till that late

3. Although there will be an increase in profit for Mamak operators, somehow it may not be as high as being anticipated. 3 reasons accounted for this. First, customers at most will order a meal & sit there the whole night. Even if there is, it will be nothing more than a second glass of drink. Second, it happens in the middle of inflation shock. Prices of flour, rice & sugar has gone up several times & they yet to increase the price of food. Third, many people would rather choose to stay at home & watch. Therefore the overall profit churned could be mild.

4. Businesses may not make that much at the end of the day if there are rivals of similar nature advertise aggressively at the same time. Example if Carlsberg & Heineken do advertise aggressively, which will prevail at the end of the day? Which will enjoy a surge in demand? Again this lies in preference & the elasticity of demand

1 comment:

Tats! said...

negative externalities;

people watching football wakes neighbour up due to midnight agressive support for their favourite team.