The process by which inefficient firms - monopolies being productively inefficient (X-inefficient) and allocatively inefficient - will be replaced by more efficient firms
Hi everyone, really dreading this exam, just wondering if anyone could give me a couple of really key topics to understand and focus my revision on for tomorrow? Mainly the ones that will help massively in the 25 markers? Thank you, and good luck!!
Hi everyone, really dreading this exam, just wondering if anyone could give me a couple of really key topics to understand and focus my revision on for tomorrow? Mainly the ones that will help massively in the 25 markers? Thank you, and good luck!!
Hi everyone, really dreading this exam, just wondering if anyone could give me a couple of really key topics to understand and focus my revision on for tomorrow? Mainly the ones that will help massively in the 25 markers? Thank you, and good luck!!
The process by which inefficient firms - monopolies being productively inefficient (X-inefficient) and allocatively inefficient - will be replaced by more efficient firms
Coined by Joseph Schumpeter
oooh okay! but surely, if they're a monopoly, another firm will hardly be able to get in? and if they can easily get in like that, then monopolies would begin to act against them e..g limit price/predatory pricing surely?
Hi everyone, really dreading this exam, just wondering if anyone could give me a couple of really key topics to understand and focus my revision on for tomorrow? Mainly the ones that will help massively in the 25 markers? Thank you, and good luck!!
- Monopolies / perfect comp comparisons - size and efficiency - labour markets usual inequality in labour - price discrimination - Cba - gov intervention
pretty sure 2 of those AT LEAST should come up . Let's hope so😂😅
Hi everyone, really dreading this exam, just wondering if anyone could give me a couple of really key topics to understand and focus my revision on for tomorrow? Mainly the ones that will help massively in the 25 markers? Thank you, and good luck!!
Market failure and government intervention to cure it.
oooh okay! but surely, if they're a monopoly, another firm will hardly be able to get in? and if they can easily get in like that, then monopolies would begin to act against them e..g limit price/predatory pricing surely?
Correct. Creative destruction assumes the market has at least some degree of contestability
oooh okay! but surely, if they're a monopoly, another firm will hardly be able to get in? and if they can easily get in like that, then monopolies would begin to act against them e..g limit price/predatory pricing surely?
It is a theory, not necessarily true. It is a good eval point though.
Evaluate the view that competition policy is never necessary because, in the long run,market forces will ensure that monopolies cannot abuse their power and will not last.
how can market forces stop monopolies abusing their power though?
You have to talk about the fact that technology has been introduced to a lot of markets e.g. amazon and ebay have made some entry barriers lower so technically you could argue that contestability is increased thus allowing firms to compete against monopolies and taking away their market share.
however, creative destruction, (where R&D/innovation takes over the existing industry e.g. itunes... but then illegal downloads ****ed it) so essentially monopolies investing in R&D as they are argued to do so are screwing themselves over by allowing these newer technologies and firms to replace them hence not lasting (in accordance to the question)
Also you can say that if a monopoly isn't efficient it may simply collapse because consumers will find it undesirable and find alternatives
this is then evaluated on the basis that often monopolies produce necessities and people have inelastic demand
so usually competition policy is needed, depending on the nature of the monopoly
i keep answering your questions but it is kind of aiding my revision haha cheers
Hey, I've been revising and think I can handle the generic CBA essay, the only problem I've got right now is with the diagrams, could someone tell me what 2-3 would be relevant to a CBA answer?
Hey, I've been revising and think I can handle the generic CBA essay, the only problem I've got right now is with the diagrams, could someone tell me what 2-3 would be relevant to a CBA answer?
MSC/MPC externalities diagrams for the social costs of an infrastructure project
or MSB/MPB if it's a positive externality
not sure on a third... maybe the state provision diagram showing excess demand without government provision (e.g. to show excess demand if Heathrow doesn't get an extra runway)