The demand curve indicates that, while the firm could raise its price, the demand for its product is so elastic that it would be unprofitable to do so…too many sales would be lost. However, the firm in monopolistic competition is not always in such a helpless condition. To the extent that a firm can make its product or service different from those of its competitors its operations and its costs. Where can people with such knowledge and experience be found? One likely source is the industry itself, in the person of retired senior officials, such as executives and board members, of the company being regulated. Even if the regulators come from outside the natural monopoly being regulated, they must depend heavily for their information on the management of the company. Thus, the process of regulation is far from the clear cut, objective procedure it is often believed to be, since the people who impose the regulations are not (cannot be) uninfluenced by the corporation they are intended to regulate. This raises the question of whether regulatory boards can always be counted upon to act in the best interests of the consumer, or whether the interests of the producer might not take precedence, as has been suggested in the case of the regulation of the airlines. It is neither possible nor fair to generalize concerning the effectiveness of regulatory boards, since some seem to be much more effective protectors of the consumer’s interests than others.
You need Biotin for hair growth The problem of hair loss may be as a result of deficiency of one or two vitamins or minerals. People are encouraged to check on their diets in a very big way. Checking on the diet will not only solve...
The Perfect Pushup Reviewed [/caption]Although pushups are incredibly beneficial, the fact remains that thousands of people do them wrong every single day. This leads to many injuries and it may not be possible to get the best results when you are not doing this...
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With greater control over prices, it can be expected that oligopolistic industries will generally enjoy higher rates of profit than competitive industries. In competitive industries, above-average rates of profit usually attract new producers into the industry, causing output (supply) to rise and prices and profits to fall. This does not happen so readily in oligopolistic industries for several reasons, known as “barriers to entry” to an industry.
A major barrier to entry into many oligopolistic industries, such as steel mills and automobile manufacturing, is the vast amount of capital required to start business on a large enough scale to be efficient and competitive. A related problem for newcomers concerns securing a sufficient volume of sales to support an efficient level of production. One problem facing newcomers in this area is the tremendous volume and cost of advertising required to compete on the terms used by the industry leaders. Some oligopolists spend from 15 c to 40 c of every sales dollar on advertising – something a struggling newcomer could scarcely afford. Another problem that a newcomer would face would be consumer acceptance – regardless of how good the products of the existing producers are (or aren’t), the consumer has become familiar with them over the year, and the familiarity is strongly reinforced by the heavy advertising that oligopolists usually do. It is quite difficult for a newcomer to break down these attitudes. Another problem that prevents newcomers from imitating and established producer’s product is the patent, which is a legal device that has been used to great advantage by the drug companies.
Credit Score Industry Infighting: Greed Exposed Full disclosure: I detest the credit score industry. If you are like most U.S. consumers, you have been brought up (or forced to participate) in a consumer credit system in which we are taught to worship at the altar of...
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Sole Proprietorship - A business firm owned (and usually managed) by a single person who bears full legal liability for the firms debts.
Partnership – A business firm owned by two or more persons, with each person bearing full legal liability for the firm’s debts.
Corporation – A business firm which is a separate legal entity from its owners, or shareholders, each of whose liability is limited to the amount of his or her investment in the firm.
Conglomerate – A group of seemingly unrelated types of corporations controlled in varying degrees by a central management group, through “holding companies” which own shares in those corporations.
Crown Corporation – A corporation owned by a government, being ultimately responsible, through a cabinet minister, to that government.
Proxy – A legal instrument whereby a shareholder’s right to vote at shareholder’s meetings is delegated to another person, either with or without specific instructions as to how that vote will be exercised.
Board of Directors – A group of people elected by the shareholders of a corporation to provide direction to the management of the corporation.
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Think back to some of the massive financial fiascos and blowups that turned the tide in the stock market: Penn Central declaring bankruptcy in 1970; the Fed stepping in to rescue the Continental Illinois Bank in 1984; Mexico’s peso debacle in 1994; and the Long Term Capital Management crisis in 1998.
This brings us to 2008 and the Bear Sterns (BSC) calamity. We were staring into the abyss, but the Fed stepped in and the market rebounded more than 400 points.
This is the stuff bottoms are made of!
We almost certainly have reached a bottom in the financial s, but that is not to say there won’t be more blowups and down days ahead. For the most part, though, things can’t get much worse than they are right now.
Consumer confidence is extremely low and we’ve seen the steepest year-on-year drop in home prices since 1968. In fact, some people are buying houses again, because prices are coming back in line with reality.
So, investors should be thinking six to nine months down the road as they’re looking at what to buy now. One area you definitely want to get positioned in is alternative energy.
The 30% to 40% secular growth in alternative energy stocks will not be stopped by a recession or a bear market because:
1) Governments are beginning to mandate the use of cleaner and greener energy and technologies.
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Morningstar: Go-Anywhere Funds Beat The Market Heat In a recent article, Morningstar writer Wenli Tan notes that many go-anywhere funds have for the most part side-stepped recent turmoil and evaded serious losses. Some of this success can be attributed to these funds' ability to short stocks (a...
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