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Wednesday, 26 October 2016

Theme 3: Mergers, market power and efficiency

Nice article to read on the impact of takeovers and mergers on economic efficiency and consumer welfare.
Drawing on research on the US economy, a report finds that corporate integration accelerates the process towards oligopolistic markets which can lead to higher prices in the long run.
"Bruce Blonigen and Justin Pierce of the Federal Reserve Board have some evidence. In a new paper titled “Evidence for the Effects of Mergers on Market Power and Efficiency,” they look at how mergers in manufacturing affect corporate performance. What they discovered is that mergers usually tend to increase market power -- in other words, they allow companies to increase profits by hiking prices. But they don’t find much evidence for improved efficiency."
Salmaan, let the class know what you think!

Sunday, 23 October 2016

Y12 Economists: Theme 1 - Indirect Taxation & Government Subsidies

Hello all,

just a heads up on this weeks lessons. We only have 3 this week, so I will go though some theory tomorrow (indrect taxes and subsidies), then rest of week, will be spent going through some long answer questions.

All themes: The 6p a minute cafe

I love this idea!

Click here to access a very different business model. This is definitely thinking outside the box. Eamon, can you see any economic theory behind this model?

Theme 4: Ceta talks: EU hopes to unblock Canada trade deal

Click here to access an article about trade blocs, trade deals and the advantages/disadvantages for those involved.

Theme 3: AT & T to buy Time/Warner - integration

Click here to access an article discussing the latest major piece of business integration. For once, I actually find myself siding with Donald Trump!

Useful article when looking at horizontal/conglomerate integration. Specifically the potential advantages/disadvantages of the deal for consumers.

The companies say the deal will bring all sorts of good things for the consumer. However, many (including Trump) are suggesting it would make the company far too powerful.

What do you think...........Aruj?

Thursday, 20 October 2016

Theme 1: Elasticity of Supply in action: Where has all the whisky gone?

An almost perfect example here of inelastic supply in action. By law, all Scotch whisky must be aged for a minimum of three years and it takes several years for new distilling capacity to come online.

Questions for Tammy to answer....

Why has the price of whisky gone up? (use a supply & demand diagram in your answer)

What does the article suggest about the elasticity of supply of malt whisky?

Wednesday, 19 October 2016

Theme 3: Netflix and reducing contestability of on line streaming

the video streaming market is one that could be classed as a good example of a highly contestable market. This is on the grounds that the market contains some of the characteristics of contestability such as relatively low sunk costs, low customer loyalty and the market has a highly credible risk of new firms entering.
In recent years, Netflix has become one of the world’s leading providers of video streaming. Concern that their growth was faltering has now reduced as new figures show that the number of new subscribers has increased by 3.2m worldwide between July and September 2016. One key to their growth, however, is the broadened use of their own programmes – many subscribers have shifted across to Netflix to consume their original content (House of Cards, Daredevil & Narcos to name but a few). The cost of such bespoke shows can be considerable and, as such, suggest that it may put off new entrants to the market who are unable to compete with the quality of shows or invest in production of original content when it has little guarantee of success. It could be argued that this level of development in the market is reducing the threat of new-firm entrants and making the market less contestable.
Here is a short news cast outlining recent announcements about Netflix’s success.