Tuesday, May 15, 2007

Vemork

In 1911, the Vemork hydroelectric station in Rjukan started exploiting the tremendous power in the waters that flow from the mighty Hardangervidda down into the narrow Vestfjord valley. Norsk Hydro, Norway´s great industrial adventure, was born here, among the perilous cliffs and deep gorges.

Late in 1938, Lise Meitner, Otto Hahn and Fritz Strassman discovered the phenomenon of atomic fission. Physicists everywhere realized that if chain reactions could be tamed, fission could lead to a promising new source of power. What was needed was a substance that could "moderate" the energy of neutrons emitted in radioactive decay, so that they could be captured by other fissionable nuclei. Heavy water was a prime candidate for the job.

Allied forces were determined to stop Nazi Germany from developing the atomic bomb. Of two materials to control a nuclear reaction -— pure graphite and heavy water -- the Germans chose heavy water because of a mathematical error in calculating the use of graphite. The German nuclear research community relied on a supply of deuterium oxide [heavy water] from the Norwegian Norsk Hydro plant, the only commercial production facility. This plant in Vemork, Norway was the world's major source of heavy water in the early 1940s. In the United States, Heavy water was used as a coolant and moderator in nuclear materials production reactors at the Savannah River Site.

Lemon Market

In 1970, American economist George Akerlof wrote a paper called "The
Market for 'Lemons,'" which established asymmetrical information theory.
He eventually won a Nobel Prize for his work, which looks at markets
where the seller knows a lot more about the product than the buyer.

Akerlof illustrated his ideas with a used car market. A used car market
includes both good cars and lousy ones (lemons). The seller knows which
is which, but the buyer can't tell the difference -- at least until he's
made his purchase. I'll spare you the math, but what ends up happening
is that the buyer bases his purchase price on the value of a used car of
average quality.

This means that the best cars don't get sold; their prices are too high.
Which means that the owners of these best cars don't put their cars on
the market. And then this starts spiraling. The removal of the good cars
from the market reduces the average price buyers are willing to pay, and
then the very good cars no longer sell, and disappear from the market.
And then the good cars, and so on until only the lemons are left.

In a market where the seller has more information about the product than
the buyer, bad products can drive the good ones out of the market.