44
votes
Why does Taiwan dominate the semiconductors market?
This is because semiconductors have economies of scale over extremely large number of units produced.
Economies of scale mean that the more you produce the cheaper production gets. Many firms will ...
- 58.5k
30
votes
Accepted
Do companies have non compete agreements between each other?
This is known as dividing markets or market allocation, and it is against the law in the US, the EU, and I imagine in most countries with antitrust laws.
- 29.7k
14
votes
In microeconomics : is this the contradiction in the atomicity of firms ?
A price-taking firm takes prices as given, but that does not mean that the firm cannot influence prices; it just means that the firm ignores its own impact on prices.
Now the question is how sensible ...
- 13.7k
10
votes
Accepted
Why bankrupt firms continue to operate?
Declaring bankruptcy is a way to prevent creditors from seizing assets and pursuing lawsuits to recover what they are owed in a piecemeal fashion. It forces all parties to wait for a judgement that ...
- 9,907
7
votes
Accepted
In microeconomics : is this the contradiction in the atomicity of firms ?
This does sound a lot like the “contradiction” that Keen tries to derive. The key to resolving it is to remember that firms are small relative to the market, so $$\frac{\mathrm dQ}{\mathrm dq_i} = 0.$$...
- 2,156
7
votes
Accepted
Why do we spread knowledge across nations?
This is a long comment that is too long for the comment box.
In fact, many research projects in US are secretive, especially the ones related to military. At the same time, much, much more research ...
- 2,084
6
votes
Is net neutrality not important in a competitive market of internet providers?
The viewpoint is this. The ISP is responsible for relaying internet traffic to their customers - they have different models for this, by "speed", by amount of data, etc and this is working reasonably ...
- 159
6
votes
Accepted
Intermediate Case of Bertrand and Cournot
These papers could be interesting to you. First, a classical contribution:
Singh Nirvikar and Xavier Vives, 1984. "Price and Quantity Competition in a Differentiated Duopoly," RAND Journal of ...
- 3,521
6
votes
Why have so many legitimate smaller biotechs sprung up and thrived?
I would prefer to take a broader tact with this: Why aren't all firms bought at a smaller size? Why are there any small R&D firms?
One answer is related to uncertainty.
Some firms look like they ...
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5
votes
Why do some perfectly competitive, loss-making firms shutdown and others don't?
$AVC<AR$ means, without considering fixed cost, the firm is making a profit of $AR-AVC>0$ per unit of output. Compare the two options: keep producing vs shutdown:
Keep producing: $\text{Avg ...
- 16.1k
5
votes
Accepted
Competitive vs complete and non-competitive vs incomplete marekts
Complete market is a market where every possible asset or good can be assigned a price and where you have perfect information, can make perfect contracts and zero transaction costs. Any market can be ...
- 58.5k
4
votes
Accepted
Non-constant returns to scale and competitive factor markets
Frankel examines the use of the Cobb-Douglas formulation in aggregate data, where as a matter of macroeconomic(and essentially logical) identity output is exhausted in paying the factors of production....
4
votes
Why does competition work for capitalism?
Competition "works" in capitalism in the sense that society, as a whole, is provided with the maximum possible quantity of goods for a price which gets close to the cost of producing the good.
...
- 2,155
4
votes
Do companies have non compete agreements between each other?
Real life is more complicated than that. For example Companies A and B might be competing in the same market sector, but then collaborate on producing a new product aimed at a particular niche in the ...
- 451
4
votes
Measuring effects of degree of (buyer) competition on price: references
You might be looking for the term monopsony power or perhaps oligopsony power.
A superficial look at the literature indicates that the Herfindahl-Hirschman index (HHI), so commonly used in assessing ...
- 16.4k
4
votes
Accepted
What has been the reception of Posner & Weyl’s claim that property rights lead to market power?
In narrow sense of the word the article was definitely peer reviewed as it was published in Journal of Legal Analysis. But in this narrow sense it was most likely peer reviewed by jurists not ...
- 58.5k
4
votes
Accepted
Does the Labor Theory of Value hold in the long term in competitive markets?
No it does not for several reasons. Labor theory of value (LTV) central tenant is that there is some intrinsic component to value determined objectively by labor (see Brue and Grant History of ...
- 58.5k
4
votes
Accepted
How are real income and utility the same thing?
Real income and utility are not the same thing but utility can be expressed as a function of income because income is what allows you to consume goods and services.
For example, let us assume there ...
- 58.5k
4
votes
How can we explain quantity competition and price taking?
When I studied the basic principles of microeconomics, a price-setting monopoly made perfect sense to me, but price-taking firms under perfect competition never did. No single firm can influence the ...
- 58.5k
3
votes
Competition and welfare - empirical evidence
Here is a fact sheet by the OECD about the effects of competition. It is mostly concerned with growth and productivity, but also discusses the effects on poor consumers and prices. It cites a wide ...
- 497
3
votes
Accepted
Hayek's defense of competition regulation
This article states:
In both of his seminal works in political theory,
The Constitution of Liberty and Law, Legislation and Liberty, Hayek endorsed as a legitimate function of the ...
- 8,631
3
votes
Adam Smith and wage gap?
Yes, Smith addresses these issues in Book 1 Chapter 10 of The Wealth of Nations. Firstly, he notes that where two jobs are in almost every respect equivalent, we should expect them to pay the same ...
- 17k
3
votes
How can perfectly competitive firms earn zero profits?
First, let's deal with the semantics and terminology aspect: what the word "profit" means in Economics, and what the word means in the everyday/business/accounting use, are two different things.
In ...
3
votes
Accepted
What would you call a real market that is close to perfect competition?
I don't think there is a standard term for what you'd want to refer to. I'd consider the following good candidates though:
Near-perfect / almost-perfect / close-to-perfect / epsilon-perfect ...
- 16.1k
3
votes
Emergence of notion "primitive business" in the era of Industry 4.0 and globalization
There surely is research about the complement(s) of the (low tech) "primitive businesses", i.e. the high-tech and/or innovative businesses.
The US CES for instance publishes a BDS-HT (...
3
votes
Do companies have non compete agreements between each other?
Would you consider something like Apple Records vs Apple Computer to be a non-compete? There were legal battles over trademark, and early on "As a condition of the settlement, Apple Computer ...
- 131
3
votes
What are possible solutions when promoting competition is not applicable?
There is one universal "solution" to monopolism without government intervention.
Just allow the monopoly to do its worst. It will give very strong incentives to find ways to satisfy needs of ...
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