http://www.tutor2u.net/blog/index.php/economics/ en tutor2u.net Copyright 2012 2012-02-12T07:41:03+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/france-and-flexible-employment http://www.tutor2u.net/blog/index.php/economics/comments/france-and-flexible-employment#When:10:03:05Z This article could be useful as an illustration of the EU context in relation to employment in general, and flexible employment in particular. Attracting inward FDI is arguably a significant benefit of UK membership of the EU, and one of the advantages which the UK can offer compared to, say, France is relatively flexible employment laws. AS and A2 Specifications, AQA Economics Unit 2, AQA Economics Unit 4, EdExcel Economics Unit 2, EdExcel Economics Unit 4, A2 Macro, Business Economics, Competitive Markets, European Economy, Labour Market, Macroeconomic Policies, Supply-side policies, OECD Economies, French Economy, Teaching of Economics, 2012-01-22T10:03:05+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/unit-3-micro-contestable-markets-lucozade-takes-on-coca-cola http://www.tutor2u.net/blog/index.php/economics/comments/unit-3-micro-contestable-markets-lucozade-takes-on-coca-cola#When:19:24:11Z A sparkling hat tip to Pete Davies for spotting this one. 1.7 billion litres of cola drank were drunk globally in 2010 & now Lucozade (owned by GlaxoSmithKline) wants a slice of the action!  with the launch of Lucozade Energy Cola. They already have a well-established position in the energy drinks market. Can they overcome possible consumer resistance to this product and brand extension? Marketing Week reports something revealing about their point of sale strategy. Lucozade Energy Cola has already reached retailers ahead of the launch apparently with written guidelines for shopkeeprs asking for it to be stocked in the “energy drink section on the chiller”, but placed “next to the coke selection where possible.! Maybe the new product will find a way into the secret stashes of this Manchester schoolboy entrepreneur? AS and A2 Specifications, AQA Economics Unit 3, EdExcel Economics Unit 3, A2 Micro, Business Economics, Competitive Markets, Market Equilibrium and Price, Price Mechanism in Action, Teaching of Economics, 2011-10-10T19:24:11+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/competition-plan-for-universities http://www.tutor2u.net/blog/index.php/economics/comments/competition-plan-for-universities#When:15:36:01Z Competition, AS Microeconomics, A2 MicroeconomicsSo the Universities White Paper has been published.  Words like “Competition” on news feeds instantly make me sit up and take notice.  As my Year 12s embark on their odyssey into market structures and ever more close encounters with efficiency, I think this might just be the case study of the moment.  After all its subject matter is foremost in many of their minds. AS and A2 Specifications, AQA Economics Unit 1, AQA Economics Unit 3, A2 Micro, AS Micro, Behavioural Economics, Game Theory, Business Economics, Competitive Markets, Monopolistic Competition, Competition Policy, Government Intervention, Maximum Prices, Market Failure, Information Failure, 2011-06-28T15:36:01+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/do-you-agree-that-the-government-should-provide-support-to-the-uk-car-indus http://www.tutor2u.net/blog/index.php/economics/comments/do-you-agree-that-the-government-should-provide-support-to-the-uk-car-indus#When:09:25:00Z This is a fairly classic A2 macroeconomics question, and one that the European Automobile Manufacturers Association has been considering at their meeting in London last week. Their conclusion? That non-European governments should scale back assistance for their own automotive industries, but at the same time governments in Europe should support the industry’s efforts to cut car emissions. A2 Macro, Emerging Economies, Business Economics, Competitive Markets, European Economy, Government Intervention, Subsidies, Macroeconomic Policies, Supply-side policies, Manufacturing Industry, 2011-06-12T09:25:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/a2-micro-competition-policy http://www.tutor2u.net/blog/index.php/economics/comments/a2-micro-competition-policy#When:10:02:00Z The aim of competition policy is promote competition; make markets work better and contribute towards improved efficiency in individual markets and enhanced competitiveness of UK businesses within the European Union single market. AS and A2 Specifications, AQA Economics Unit 3, EdExcel Economics Unit 3, A2 Micro, Business Economics, Competitive Markets, Monopoly, Oligopoly, 2011-05-20T10:02:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/revision-profit http://www.tutor2u.net/blog/index.php/economics/comments/revision-profit#When:18:00:00Z Profit measures the return to risk when committing scarce resources to a market or industry. Entrepreneurs take risks for which they require an adequate rate of return. The higher the market risk and the longer they expect to have to wait to earn a positive return, the greater will be the minimum required return that an entrepreneur is likely to demand. Economists distinguish between different types of profit – explained below: AS and A2 Specifications, AQA Economics Unit 3, EdExcel Economics Unit 3, A2 Micro, Business Economics, Competitive Markets, Monopoly, Oligopoly, Price Discrimination, Government Intervention, Regulation, Teaching of Economics, 2011-05-19T18:00:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/a2-economics-revision-market-structure-conduct-performance http://www.tutor2u.net/blog/index.php/economics/comments/a2-economics-revision-market-structure-conduct-performance#When:14:54:00Z This updated revision presentation is designed to help students preparing for markets-related topics on A2 economics specifications. Market Structure Conduct & Performance - revision presentation Download printable (pdf) slide handout AS and A2 Specifications, AQA Economics Unit 3, EdExcel Economics Unit 3, A2 Micro, Business Economics, Competitive Markets, Economies of Scale, Monopolistic Competition, Monopoly, Oligopoly, Price Discrimination, Competition Policy, Market Equilibrium and Price, 2011-05-19T14:54:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/revision-presentation-on-perfect-competition http://www.tutor2u.net/blog/index.php/economics/comments/revision-presentation-on-perfect-competition#When:07:23:00Z A revised revision presentation on perfect competition comes in three formats Streamed presentation can be found here Handout (pdf) Zipped VLE Version AS and A2 Specifications, AQA Economics Unit 3, A2 Micro, Business Economics, Competitive Markets, 2011-05-19T07:23:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/a2-micro-competition-and-efficiency http://www.tutor2u.net/blog/index.php/economics/comments/a2-micro-competition-and-efficiency#When:06:36:29Z Are highly competitive markets most likely to lead to outcomes that achieve economic efficiency? The common characteristics of markets that are considered to be “competitive” are: AS and A2 Specifications, AQA Economics Unit 3, EdExcel Economics Unit 3, A2 Micro, Business Economics, Competitive Markets, Cost Benefit Analysis, Competition Policy, 2011-05-19T06:36:29+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/electric-cars-government-failure http://www.tutor2u.net/blog/index.php/economics/comments/electric-cars-government-failure#When:12:37:01Z There was a great in-depth look at activity in the car market in the Sunday Times yesterday with regards to electric powered vehicles. AS and A2 Specifications, AQA Economics Unit 1, EdExcel Economics Unit 1, OCR AS Economics Unit F581, AS Micro, Business Economics, Competitive Markets, Government Intervention, Government Failure, Regulation, Subsidies, Market Failure, Externalities, Merit & De-Merit Goods, Market Equilibrium and Price, Price Mechanism in Action, Transport Economics, 2011-05-16T12:37:01+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/as-micro-revision-market-power http://www.tutor2u.net/blog/index.php/economics/comments/as-micro-revision-market-power#When:12:25:00Z A revision note on aspects of industries in which there is strong market power among one or a few businesses.  Most markets are competitive with a number of suppliers (producers) competing for the demand of consumers. Some are more competitive than others. At AS level it is important to understand some of the factors that lead to market (monopoly) power and to evaluate the costs and benefits of markets where monopoly power exists together with the effects of different types of government intervention. The revision note is available to download here: Revision_Market_Power.doc AS and A2 Specifications, AQA Economics Unit 1, EdExcel Economics Unit 1, AS Micro, Business Economics, Competitive Markets, Monopoly, Government Intervention, Regulation, Market Failure, 2011-04-21T12:25:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/smartphones-and-creative-destruction http://www.tutor2u.net/blog/index.php/economics/comments/smartphones-and-creative-destruction#When:07:23:00Z Is the multi-function and ubiquitous smartphone one of the best examples of creative destruction. This article “10 Things Killed by the Smartphone” points to a clutch of devices and products whose demand has been affected by the mass volumes of data-heavy smartphones that now dominate the market. MP3 Players Nintendo 3DS and Sony PSP Point-and-Shoot Cameras Personal Video Players Voice Recorders Portable GPS Navigation Devices Personal Digital Assistant (PDA) Wristwatch iPod Nano Paper Maps Telephone Directory Assistance AS and A2 Specifications, AQA Economics Unit 1, AQA Economics Unit 3, EdExcel Economics Unit 1, EdExcel Economics Unit 3, A2 Micro, AS Micro, Business Economics, Competitive Markets, Oligopoly, Economic Growth, Economics of Technology, Market Equilibrium and Price, Nature of Demand, Price Mechanism in Action, Teaching of Economics, 2011-04-16T07:23:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/a2-micro-updates-on-competition-issues http://www.tutor2u.net/blog/index.php/economics/comments/a2-micro-updates-on-competition-issues#When:09:30:00Z Here are some links to recent news stories on competition and monopoly issues in the UK and the EU Single Market AS and A2 Specifications, AQA Economics Unit 3, EdExcel Economics Unit 3, A2 Micro, Business Economics, Competitive Markets, Monopoly, Oligopoly, Competition Policy, Government Intervention, 2011-04-02T09:30:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/nokia-and-microsoft-form-partnership http://www.tutor2u.net/blog/index.php/economics/comments/nokia-and-microsoft-form-partnership#When:20:16:00Z Microsoft Nokia Partnership, Market Structures, Collaboration, Oligopoly, Joint VenturesIt would seem that the only way two major business are able to compete in the competitive mobile phone market is by joining forces. Microsoft and Nokia are set to pool technology and assets in the hope of creating a worthwhile impact on the smart-phone market. Will they succeed? How can this story be used in the classroom? Business Economics, Competitive Markets, Economies of Scale, Oligopoly, 2011-02-12T20:16:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/tracking-market-share-in-web-browsers http://www.tutor2u.net/blog/index.php/economics/comments/tracking-market-share-in-web-browsers#When:23:21:00Z The concept of market share is an important one in economics.  But what data can teachers use other than the (slightly) tired example of Tesco, Asda et al in the UK supermarket market?  One approach is to conduct a piece of primary market research amongst the class to see what their preferred Internet browser is and then to compare the market share calculated from student preferences with the overall global browser market… AS and A2 Specifications, AQA Economics Unit 1, AQA Economics Unit 3, EdExcel Economics Unit 3, A2 Micro, AS Micro, Business Economics, Competitive Markets, Economic Growth, Economics of Technology, Teaching of Economics, 2011-02-04T23:21:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/regulation-and-the-banking-industry-reflections-from-davos http://www.tutor2u.net/blog/index.php/economics/comments/regulation-and-the-banking-industry-reflections-from-davos#When:16:42:00Z If, like my school, you haven’t entered students for Unit 3 in January but are teaching both A2 units side-by-side for June examination, you might be looking for examples of competition policy and regulation to offer your students in the coming weeks. The report of the Independent Commission on Banking and the focus on regulation at last week’s Davos meeting are very well timed; this report filed today by Tim Weber of the BBC gives a neat summary of the time leading up to Lehman’s collapse, and offers a rather chilling conclusion from informal dinner-table discussions with the world’s top bankers that it is unlikely that regulators can, in practice, untangle the systemic risks in the financial system that make it imperative for government’s to step in and support failing banks. If you would like to follow this up as an example with students, you might try some of the following links. There are numerous articles assessing the report of the ICB - just a couple are given here. A2 Micro, Business Economics, Competitive Markets, Competition Policy, Financial Markets, Government Intervention, Regulation, Market Failure, UK Economy, Credit Crunch, 2011-01-30T16:42:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/tesco-time-to-start-a-price-war http://www.tutor2u.net/blog/index.php/economics/comments/tesco-time-to-start-a-price-war#When:17:40:00Z Here is some pure gold dust for students of competition and strategy in the food retailing industry! A leading analyst (Dave McCarthy at Evolution Securities) has written a lengthy research document building the case for Tesco to launch an aggressive price war - permanently cutting prices on hundreds of different items. Much of the case for the price discounting is reproduced in this Guardian article and key arguments are that Tesco is better able to withstand the hit on group profits from doing it, and that lowering the returns from the sector will help to bring an end to the land grab and building programme that ultimately may not be in anyone’s interests. Has Tesco lost its way recently? Sainsbury’s was the best performing supermarket over the Christmas period. Its like-for-like sales were up by 3.6%. I have stopped shopping at Tesco partly because the retail experience is so dire (the mega store in Slough is just about the most soulless place on the planet) and also because Sainsbury’s and Waitrose have significantly raised their game in keeping products available on the shelves and in extending their value range. The Waitrose “Essentials” range has been a big success. A new CEO provides a window of opportunity for a change of direction at Tesco and this analyst believes that Tesco needs to exploit first mover advantage before the rivals become too strong to absorb future price wars. Read: Analyst advises Tesco to launch a price war to damage the competition AS and A2 Specifications, AQA Economics Unit 1, AQA Economics Unit 3, EdExcel Economics Unit 1, A2 Micro, AS Micro, Business Economics, Competitive Markets, GCSE Economics, Market Equilibrium and Price, Nature of Demand, Price Mechanism in Action, 2011-01-19T17:40:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/barriers-to-entry-how-important-is-customer-loyalty http://www.tutor2u.net/blog/index.php/economics/comments/barriers-to-entry-how-important-is-customer-loyalty#When:17:23:00Z There are lots of excellent reports coming out at the moment focusing on the strategic issues facing businesses as they prepare for the new year.  I was interested to pick up on one part of a report from Ipsos MORI which highlights the variation in levels of customer loyalty in different consumer markets.  A chart from this report is highlighted below and it generates some interesting comparisons that students might analyse as they consider the relative importance of customer loyalty as a barrier to entry: According to the data, sectors such as grocery retailing and financial services enjoy much higher consumer loyalty than hotels, department stores or clothing retailers.  Why?  *Hotels are listed at the bottom of the table, yet they are active in promoting use of customer loyalty schemes?  * To what extent does high customer loyalty present an insurmountable barrier to entry for a new entrant wanting to build a viable scale in a new market?  * Is the best way to overcome entrenched customer loyalty to enter a market through acquisition? A2 Micro, Business Economics, Competitive Markets, 2010-12-27T17:23:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/movie-rental-on-a-usb-stick http://www.tutor2u.net/blog/index.php/economics/comments/movie-rental-on-a-usb-stick#When:07:39:00Z Reading this piece gave me flashbacks to the mid 1980s when I would trek in excited fashion to my local petrol station who did a brisk trade in renting out VCR tapes to customers wanting to watch a move over the weekend. A generation later and the movie rental industry has gone through several transformations. Content has migrated online and high street movie rental businesses are thin on the ground for good reason! Here is a new kid on the block attempting to challenge movie streaming businesses and the likes of Love Film. A US business Flix on Stix Kiosks allow you to download movies onto a USB 3.0 stick loaded with proprietary anti-piracy software. You choose how many movies or games to download and the rental period - the files are self deleting. It is an interesting business model that cuts out the cost of returning DVDs through the mail or in person. And rented movies can presumably be played on any device you choose within the rental period. Dynamic efficiency in action? More information here  How long before this business model arrives in the UK? AS and A2 Specifications, AQA Economics Unit 3, A2 Micro, AS Micro, Business Economics, Competitive Markets, Economic Growth, Economics of Technology, Market Equilibrium and Price, Nature of Demand, Teaching of Economics, 2010-12-11T07:39:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/on-the-first-day-of-christmas http://www.tutor2u.net/blog/index.php/economics/comments/on-the-first-day-of-christmas#When:00:21:00Z There are lots of aspects of economics in this little story from the Independent on Wednesday 1st December. The final section of the report into the effects of the early snow falls is about Christmas tree shortages, and links to this BBC story about Nordmann fir trees, and the two together contain several references to the A level syllabus: AS and A2 Specifications, AQA Economics Unit 1, AS Micro, Business Economics, Competitive Markets, European Economy, EU Farming and Fishing, Market Equilibrium and Price, Nature of Demand, Nature of Supply, Price Mechanism in Action, Quirky Trivia, 2010-12-03T00:21:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/google-investigation http://www.tutor2u.net/blog/index.php/economics/comments/google-investigation#When:22:22:00Z The European Commission has launched an investigation into Google after other search engines complained that the firm had abused its dominant position. The EC will examine whether the world’s largest search engine penalised competing services in its results… A2 Micro, Business Economics, Competitive Markets, Monopoly, Government Intervention, Regulation, 2010-11-30T22:22:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/growth-and-strategy-at-dominos-pizza http://www.tutor2u.net/blog/index.php/economics/comments/growth-and-strategy-at-dominos-pizza#When:13:30:00Z Despite or perhaps because of difficult economic times, the pizza delivery company Dominos UK & Ireland has enjoyed rapid growth over the last couple of years.  The company, which owns the Master Franchise to the Domino’s brand in the UK and Ireland, now operates through over 130 franchisees with an average of 4.5 stores each. And their long-term strategy contains the target of rolling out at least one new Dominos store per week in each of the next ten years, growing the business into a billion pound brand in the UK – almost double the current size. AS and A2 Specifications, AQA Economics Unit 1, AQA Economics Unit 3, A2 Micro, AS Micro, Business Economics, Competitive Markets, Management Issues, Market Equilibrium and Price, Nature of Demand, Nature of Supply, Teaching of Economics, 2010-11-27T13:30:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/the-rise-and-rise-of-internet-monopolists http://www.tutor2u.net/blog/index.php/economics/comments/the-rise-and-rise-of-internet-monopolists#When:18:08:01Z There is a fascinating piece here from the World Street Journal Blog on the inexorable rise of a new breed of internet monopolist - businesses with dominant positions in their industry space that millions of people cannot do without from day to day and where the effective barriers to genuine competition are pretty fierce. The article emphasises the importance of first mover advantages and also network economies of scale - a demand-side economy of size that normal economics textbooks are slow to introduce into their coverage. “It’s hard to avoid the conclusion that we are living in an age of large information monopolies. Could it be that the free market on the Internet actually tends toward monopolies?.....Internet industries develop pretty much like any other industry that depends on a network: A single firm can dominate the market if the product becomes more valuable to each user as the number of users rises. Such networks have a natural tendency to grow, and that growth leads to dominance.” More here “In the Grip of the New Monopolists” In a related article Edmund Conway (now based in Washington) discusses the power of disruptive technologies and the huge take up of the Apple iPad among people many of whom have never bought a laptop before.  A hat tip to my colleague Tom Allen for spotting this one. Time Magazine has listed the iPad as one of its top fifty innovations of 2010 - more here AS and A2 Specifications, AQA Economics Unit 3, EdExcel Economics Unit 3, A2 Micro, AS Micro, Business Economics, Competitive Markets, Monopoly, Economic Growth, Economics of Technology, Teaching of Economics, 2010-11-14T18:08:01+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/barriers-to-entry-cutting-it-in-the-usa http://www.tutor2u.net/blog/index.php/economics/comments/barriers-to-entry-cutting-it-in-the-usa#When:16:48:01Z The Telegragh today has a piece on our good friend Will King from King of Shaves. KoS have entered into a joint venture with Spectrum Brands Holdings, Inc., owner of Remington branded electrical shaving, grooming and styling products (remember Victor Kiam’s famous ads?) in a bid to establish a stronger foothold in North American markets that have been dominated for decades by Gillette and Wilkinson Sword. The article is a timely reminder of the entry barriers that exist when seeking to enter overseas markets. From previous experience, Will King has learned that the market dynamics of the USA are decidedly different. To win orders from retail giants Walmart and Target you need scale, heavy marketing spend and reach. It will be fascinating to see how the KoS brand does in the months ahead. Since Will King created the Original Shaving Oil in 1993, King of Shaves has grown to become the number two ‘shaving software’ brand in the UK, and is the fastest growing brand in its market place. A King of Shaves product is sold every seven seconds AS and A2 Specifications, AQA Economics Unit 1, AQA Economics Unit 3, A2 Micro, AS Micro, Business Economics, Competitive Markets, Monopoly, Teaching of Economics, 2010-11-08T16:48:01+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/start-up-stories-tony-fernandes-of-air-asia http://www.tutor2u.net/blog/index.php/economics/comments/start-up-stories-tony-fernandes-of-air-asia#When:09:29:00Z I had the pleasure of meeting Tony Fernandes in February of this year and I follow news of the expansion of Air Asia and related commercial ventures with interest. Here is an interview with him as part of the BBC’s Start Up Stories series. A2 Micro, AS Micro, Emerging Economies, Business Economics, Competitive Markets, Transport Economics, 2010-11-04T09:29:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/contestability-in-the-online-electricals-market http://www.tutor2u.net/blog/index.php/economics/comments/contestability-in-the-online-electricals-market#When:09:25:00Z The retail market for the latest TVs, gaming consoles, electronics and other gadgets has just become more contestable! Best Buy the giant US electrical retailer has announced that it is planning to launch an entry into the retail market for electrical appliances in a move that will potentially shake up the consumer electronics market which has been populated and dominated for many years by high street regulars such as Currys and Dixons, more recently by Amazon and Play.com. Best Buy’s huge economies of scale have made it relatively easy to enter the UK market. They bought a 50 per cent stake in Carphone Warehouse last year and they have already opened five new “bricks and mortar” stores in Essex, Birmingham, Southampton and Liverpool in the past few months. Their next move is to establish an online presence in the UK and it seems this will be up and running in time for the lucrative Christmas buying period. More here in this article from the Independent.   AS and A2 Specifications, AQA Economics Unit 3, A2 Micro, Business Economics, Competitive Markets, Monopoly, 2010-11-02T09:25:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/quality-rubbish http://www.tutor2u.net/blog/index.php/economics/comments/quality-rubbish#When:21:23:00Z I didn’t get where I am today without trying to lighten up occasionally. Let’s face it - the use of comedic devices to support Economics teaching can be just the job, especially in these austere times. With all this talk of comprehensive spending reviews, double dips and student financing, we all need something to put a smile on our faces.   A2 Micro, AS Micro, Business Economics, Competitive Markets, Teaching of Economics, 2010-10-14T21:23:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/lesson-worksheet-business-growth-and-short-run-costs http://www.tutor2u.net/blog/index.php/economics/comments/lesson-worksheet-business-growth-and-short-run-costs#When:22:44:00Z Here is a 20 mark revision short test that I have been using with my A2 micro students - including an answer sheet Test Business_Growth_Costs.pdf Answer sheet Business_Growth_Costs_Key.pdf AS and A2 Specifications, AQA Economics Unit 3, EdExcel Economics Unit 3, A2 Micro, Business Economics, Competitive Markets, Economies of Scale, Teaching of Economics, Lesson Worksheets, 2010-09-27T22:44:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/market-implications-of-creating-the-worlds-biggest-airline http://www.tutor2u.net/blog/index.php/economics/comments/market-implications-of-creating-the-worlds-biggest-airline#When:18:56:00Z For those of you studying or teaching OCR’s A2 Economics ‘Transport’ option, you may well have tackled, or be tackling, the ‘market structure’ section of the course. There is always usually at least one ‘market structure’ question of some sort on each paper and relevant application to the world of transport is often a weak point for some pupils. This article from the Guardian reports the approval of the merger between United and Continental to create the world’s biggest airline, in an industry which has struggled over the past decade. I suspect there are plenty of relevant Business and Economic issues to draw from this article from the impact of dominant firms and their actions on the industry, to the Business issues of growth through mergers and the relevant benefits and problems that may arise. Business Economics, Competitive Markets, Economies of Scale, Transport Economics, 2010-09-19T18:56:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/100-topical-examples-of-business-innovation http://www.tutor2u.net/blog/index.php/economics/comments/100-topical-examples-of-business-innovation#When:07:21:01Z Cross posting from the Business Studies Blog If you ever need to point students to some real-life examples of technological innovation in action, use this new list produced by the Guardian.  Some great case studies here of how technology can be used to identify new value-added services for consumers & businesses, as well as challenge the existing business models of market leaders.  The underlying theme seems to be that technology is enabling these businesses to overcome barriers to entry in a market and quickly become quite disruptive to the established operators.  Not all of these businesses will survive and thrive, but some (e.g. Spotify) are already household names and others may soon achieve that status. AS and A2 Specifications, AQA Economics Unit 3, EdExcel Economics Unit 3, A2 Micro, AS Micro, Business Economics, Competitive Markets, Monopoly, Oligopoly, Economic Growth, Economics of Technology, Teaching of Economics, 2010-09-14T07:21:01+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/samsungs-galaxy-tab http://www.tutor2u.net/blog/index.php/economics/comments/samsungs-galaxy-tab#When:08:07:00Z Joseph Schumpeter would be proud. The creative side of his destruction is still going strong - Samsung have released a “tab” to rival Apple’s iPad - but is it any good or is it just wasteful expenditure recreating the same? On “paper” it seems better with more capabilities than the iPad… but brand loyalty can be a big attractor… See the video clip comparison here. AS and A2 Specifications, AQA Economics Unit 1, AQA Economics Unit 3, EdExcel Economics Unit 1, EdExcel Economics Unit 3, A2 Micro, AS Micro, Business Economics, Competitive Markets, Monopoly, Oligopoly, Economic Growth, Economics of Technology, GCSE Economics, Market Equilibrium and Price, Price Mechanism in Action, Teaching of Economics, 2010-09-03T08:07:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/ec-on-ibm http://www.tutor2u.net/blog/index.php/economics/comments/ec-on-ibm#When:23:03:00Z The European Commission has launched two competition inquiries to study whether IBM has abused its dominant position in mainframe computers. The study will examine whether IBM has put obstacles in place that prevent competitors from operating freely. The other inquiry, launched by the Commission itself, will look at IBM’s relations with maintenance suppliers. AS and A2 Specifications, EdExcel Economics Unit 3, A2 Micro, Business Economics, Competitive Markets, Oligopoly, Competition Policy, 2010-08-02T23:03:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/economics-of-gambling http://www.tutor2u.net/blog/index.php/economics/comments/economics-of-gambling#When:09:53:00Z Earlier this month, the Economist did an in-depth special report on gambling with lots of good ideas for discussion: - is gambling chance or luck? - game theory and poker - can it be solved? - The effect of the recession on casinos: When the chips are down - growth of Asia’s gambling - Government policy and the Internet - the effects on the gambling industry. AS and A2 Specifications, EdExcel Economics Unit 3, A2 Micro, Emerging Economies, Business Economics, Competitive Markets, Management Issues, Competition Policy, Market Failure, De-Merit Goods, 2010-07-29T09:53:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/contestability-of-banking-sector http://www.tutor2u.net/blog/index.php/economics/comments/contestability-of-banking-sector#When:09:48:00Z A good case study for when discussing contestability: Britain’s first new High Street retail bank in more than 100 years opened for business today - Metro Bank. The company’s launch was accompanied with an array of gimmicks to attract maximum publicity, such as the offer of biscuits for customers’ dogs and free breakfasts for clients. Their “USP” includes: promises to open seven days a week and provide credit and debit cards within 15 minutes of application, and customer service and quirkiness to differentiate themselves. AS and A2 Specifications, EdExcel Economics Unit 3, A2 Micro, Business Economics, Competitive Markets, Oligopoly, 2010-07-29T09:48:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/robin-hood-restaurant http://www.tutor2u.net/blog/index.php/economics/comments/robin-hood-restaurant#When:15:40:00Z The Montreal restaurant Robin des Bois is trying to live up to its English namesake Robin Hood by taking from the rich and giving to the poor. A good example to use in class when discussing profit-maximising firms and the nature of industrial organisation - The people who work in the restaurant are mostly volunteers, spending their free time working there knowing that all the profits from the restaurant will go to six different local charities. (The waiting list of volunteers currently stands at around 3,500!). A2 Micro, AS Micro, Business Economics, Competitive Markets, Management Issues, 2010-04-29T15:40:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/orange-tries-to-make-the-broadband-market-more-contestable http://www.tutor2u.net/blog/index.php/economics/comments/orange-tries-to-make-the-broadband-market-more-contestable#When:16:52:00Z Less than two months since its merger with Deutsche Telekom’s T-Mobile, Orange has made a strategic decision to allow BT to take over Orange’s fixed-line infrastructure and integrate it into it’s own network. Orange’s present broadband network reaches about 65 per cent of the population and the decision to use BT’s network is designed as a way to challenge the dominant providers in broadband in the UK. The industry is an oligopoly with the leading three firms taking over seventy per cent of the market according to the latest data. Market share in UK broadband BT Retail 27% Talk Talk 23% Virgin Media 22% Sky 13% Orange 5% O2 3% Others 7% Orange has invested hundreds of millions in building up a broadband network and installing equipment in local exchanges but they have opted to outsource the network provision to BT and focus instead on selling broadband services. Orange has nearly 30 million mobile phone customers in the UK after joining forces with T-Mobile, but has slipped behind in broadband with around 840,000 customers. AS and A2 Specifications, AQA Economics Unit 3, EdExcel Economics Unit 3, A2 Micro, AS Micro, Business Economics, Competitive Markets, Oligopoly, Economic Growth, Economics of Technology, Market Equilibrium and Price, Nature of Supply, Teaching of Economics, 2010-04-16T16:52:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/the-economics-of-google http://www.tutor2u.net/blog/index.php/economics/comments/the-economics-of-google#When:18:05:00Z There is some really smart and interesting microeconomics in this super piece on the economics of google and the battle to create revenue and profit streams from buying the hardware and software to access the web and then monetising the content. A hat tip to Chris Anderson (of Long Tail and Freemium fame) for spotting this super piece “Google Docs is an attempt to reduce the Microsoft tax. Android is an attempt to reduce the Apple tax. Google’s participation in the spectrum auction a couple years ago was an attempt to reduce phone carrier market power. Google Voice is the next iteration of that attempt. Ditto for selling phones without contracts. Google Buzz is an attempt to disrupt Facebook’s market power. Google’s recent plans to build a fiber network is an attempt to go after local ISP monopolies.” “Google doesn’t have to dominate any of these industries to be successful, provided that they dominate content monetization. They merely have to make these industries more competitive, lowering the barriers to consuming a lot of content online.” Reducing barriers to entry to lower the advantages and profit streams of businesses at the top of the web stream ..... a good example of making markets more contestable but with the aim of increasing the returns from monetising search content when consumers access the web through every kind of device. More here AS and A2 Specifications, AQA Economics Unit 3, EdExcel Economics Unit 3, A2 Micro, AS Micro, Business Economics, Competitive Markets, Economic Growth, Economics of Technology, Teaching of Economics, 2010-04-06T18:05:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/ofcom-bares-its-teeth http://www.tutor2u.net/blog/index.php/economics/comments/ofcom-bares-its-teeth#When:07:58:00Z The telecoms regulator OFCOM has had a busy pre-Easter week with two notable competition policy decisions that will impact directly on consumers 1/ Ofcom orders BSkyB to make a 23.4% cut in the (wholesale) price of Sky Sports 1 and 2 to rivals such as Virgin Media and BT. Little surprise that Sky has responded that it will challenge the ruling. 2/ Ofcom orders mobile phone companies to cut the cost of termination charges - levied when people phone different networks from 4.5p to 0.5p by 2015. Mobile termination rates are the wholesale charges that operators make to connect calls to each others’ networks. These are two excellent examples to use in any essay on price capping in markets where there is monopolistic power. But will consumers reap the benefits in the long term? Or is the cap on Sky’s prices for live sport and movies merely a hidden subsidy for couch potatoes? A2 Micro, Business Economics, Competitive Markets, Oligopoly, Competition Policy, Government Intervention, Regulation, Market Equilibrium and Price, Nature of Demand, Price Mechanism in Action, Teaching of Economics, 2010-04-01T07:58:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/1-for-925-million http://www.tutor2u.net/blog/index.php/economics/comments/1-for-925-million#When:19:09:00Z Fancy a bargain - How’s this for a deal? The Independent and Independent on Sunday newspapers have been sold to Russian billionaire Alexander Lebedev (a former KGB agent) for a nominal £1, whilst receiving £9.25m over the next 10 months as part of the deal. But caveat emptor… there’s no such thing as a free lunch… A2 Micro, AS Micro, Business Economics, Competitive Markets, Management Issues, 2010-03-25T19:09:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/oft-report-finds-welfare-gains-from-liberalising-pharmacies http://www.tutor2u.net/blog/index.php/economics/comments/oft-report-finds-welfare-gains-from-liberalising-pharmacies#When:21:03:00Z The OFT has produced a new report looking at some of the welfare and efficiency effects of the decision to liberalise the retail pharmacy industry in the UK. The report finds that “Partial liberalisation of the pharmacies market has brought significant benefits for consumers, including shorter waiting times, a greater choice of pharmacies and extended opening hours….the number of pharmacies operating in England has risen by nearly nine percent. Fears that enabling easier entry would lead to large numbers closing have so far proven unfounded.” The wider availability of supermarket pharmacies on spending by consumers on over the counter medicines has led to conservatively estimated annual savings of around £5m. In the UK retailers have been free to set their own price since resale price maintenance (RPM) on branded OTCs such as pain killers and flu relief tablets was abolished in 2001. The largest share of any one company is now that of Boots (18.3 per cent), following the merger with Alliance Unichem (owner of Moss Pharmacies) to form Alliance Boots in 2006. In-store supermarket pharmacies – account for almost 7 per cent of the total. A2 Micro, AS Micro, Business Economics, Competitive Markets, Monopoly, Competition Policy, Health Economics, Market Equilibrium and Price, Nature of Supply, Teaching of Economics, 2010-03-23T21:03:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/oligopolies http://www.tutor2u.net/blog/index.php/economics/comments/oligopolies#When:13:25:01Z A good applied example here of the strategic interdependence and non-price competition that occurs in oligopolistic markets. This example focuses on the games console market, where in response to the Nintendo Wii’s motion-sensor controllers, Sony have unveiled their own one; whilst Microsoft is joining the party later this year to go even further with a full body motion controller(!). Its a good example of how oligopolistic industries interdependence (follower-leader relationship) can be of benefit to consumers via dynamic efficiency aims. A2 Micro, Behavioural Economics, Game Theory, Business Economics, Competitive Markets, Oligopoly, 2010-03-11T13:25:01+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/microsoft-finally-promotes-choice http://www.tutor2u.net/blog/index.php/economics/comments/microsoft-finally-promotes-choice#When:09:41:00Z Its been a long time coming, but finally, after years of wrangling with the EU Commission, Microsoft today has begun to offer the consumer choice as to which internet browser they wish to use. After accused of abusing its monopoly position by bundling its own Internet Explorer browser with its operating system, as discussed in this article, it is now offering a pop-up window to prompt people to choose and install one of 12 different browsers or let them stick with Microsoft’s Internet Explorer; although no doubt there will be inertia and a status quo bias. There is also now the fear that the browser choice system will confuse people. There’s no pleasing some people… A2 Micro, Business Economics, Competitive Markets, Monopoly, Competition Policy, 2010-03-01T09:41:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/coke-follows-pepsis-lead http://www.tutor2u.net/blog/index.php/economics/comments/coke-follows-pepsis-lead#When:17:58:00Z Last year, Pepsi acquired its bottlers in a (backward) vertical integration step. Today Coca-Cola announced it was following their lead, by doing the same with its North American and Scandinavian bottling businesses. They believe the $12.6 bn (non-cash) deal will reorganise its manufacturing and distribution operations, delivering $350m in synergies over four years. A2 Micro, Business Economics, Competitive Markets, Management Issues, Oligopoly, 2010-02-25T17:58:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/google-is-the-new-microsoft http://www.tutor2u.net/blog/index.php/economics/comments/google-is-the-new-microsoft#When:17:41:00Z With an 80-90% market share in online search, Google is increasingly becoming the new Microsoft in the world of anti-trust legislators. It has again come under scrutiny, as discussed here in the FT, this time accused that its search algorithm discriminates against certain competitors. A2 Micro, AS Micro, Business Economics, Competitive Markets, Monopoly, Oligopoly, Price Discrimination, Competition Policy, 2010-02-25T17:41:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/global-competitiveness-report-2009-2010-xavier-sala-i-martin http://www.tutor2u.net/blog/index.php/economics/comments/global-competitiveness-report-2009-2010-xavier-sala-i-martin#When:21:00:00Z Following on from Geoff’s entry on international competitiveness here ; this video clip sees macroeconomist Xavier Sala-i-Martin (Professor of Economics at Columbia University) discuss the current international competitiveness rankings from the World Economic Forum report 2009-10, and the recent relinquishing of the top spot by the USA. Do go to his website too… always a good source of random fun! A2 Macro, Business Economics, Competitive Markets, Global Economy, International Trade, 2010-02-22T21:00:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/take-off-for-air-asia-finding-opportunities-in-a-recession http://www.tutor2u.net/blog/index.php/economics/comments/take-off-for-air-asia-finding-opportunities-in-a-recession#When:14:55:00Z I have heard many presentations from business folk over the years and the last two years of our embryonic Entrepreneurship Society have been memorable for some superb talks. None has quite matched the impact and the quality of a talk given by Tony Fernandes, Founder and CEO of Air Asia last Thursday night. A2 Micro, AS Micro, Business Economics, Competitive Markets, Management Issues, Teaching of Economics, Transport Economics, 2010-02-13T14:55:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/north-koreas-currency-reforms http://www.tutor2u.net/blog/index.php/economics/comments/north-koreas-currency-reforms#When:13:06:00Z A couple of excellent articles here and here on the BBC website on North Korea’s complex battle between free markets and centrally planned allocation of resources. AS Macro, AS Micro, Business Economics, Competitive Markets, Economic Growth, Government Intervention, 2010-02-07T13:06:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/oft-on-orange-t-mobile http://www.tutor2u.net/blog/index.php/economics/comments/oft-on-orange-t-mobile#When:12:06:00Z In September last year, this entry discussed the Orange-T Mobile merger; and as expected, the UK’s Office of Fair Trading have today requested an official investigation into it. “The OFT’s initial view, following consultation, is that the joint venture threatens significantly to affect competition in mobile telecommunications in the U.K.,” A2 Micro, Business Economics, Competitive Markets, Economies of Scale, Management Issues, Monopoly, Oligopoly, Competition Policy, 2010-02-03T12:06:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/making-trainers-in-the-uk-how-to-compete-with-the-world http://www.tutor2u.net/blog/index.php/economics/comments/making-trainers-in-the-uk-how-to-compete-with-the-world#When:14:05:00Z A cross posting from Jim This has to be one of the best short business videos ever produced by the BBC. The New Balance factory in Cumbria is quite different.  It makes running shoes and other trainers to compete with the low labour-cost factories in the Far East.  The 2 minute video highlights some really important points about how it competes effectively.  Here is the video Terrific stuff.  Some possible follow-up or discussion questions below: - Why does the New Balance factory need to undertake a “relentless search to boost output & improve productivity” - What is meant by contiunous improvement? - “If you love your job, it goes a long way to making people good workers” according to Billy Edgar.  To what extent do you agree with this view? - Evaluate the importance of location to the success of the New Balance factory - New Balance wants to triple the factory output from 1 million to 3 million pairs of trainers per year.  Outline the main challenges New Balance will have to overcome if they are to achive this objective A2 Micro, AS Micro, Emerging Economies, Business Economics, Competitive Markets, Economies of Scale, Management Issues, Manufacturing Industry, Market Equilibrium and Price, Nature of Supply, Teaching of Economics, 2010-01-28T14:05:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/tv-price-war-begins http://www.tutor2u.net/blog/index.php/economics/comments/tv-price-war-begins#When:19:55:00Z The Telegraph reports on the news that the cost of watching live football and cricket is to be slashed in a price war. A2 Micro, Business Economics, Competitive Markets, Oligopoly, 2010-01-17T19:55:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/assorted-links-11-jan-focus-on-business-economics http://www.tutor2u.net/blog/index.php/economics/comments/assorted-links-11-jan-focus-on-business-economics#When:20:32:00Z 1/ World Bank - Latest 2010 report on Doing Business around the world - Singapore, a consistent reformer, is the top-ranked economy on the ease of doing business for the fourth year in a row, with New Zealand as runner-up. But most of the action occurred in developing economies. Two-thirds of the reforms recorded in the report were in low- and lower-middle-income economies. For the first time a Sub-Saharan African economy, Rwanda, is the world’s top reformer of business regulation, making it easier to start businesses, register property, protect investors, trade across borders, and access credit. 2/ Radio 4 In Business - New Age - A special report on implications for businesses of an ageing population. Many of the world’s biggest countries are on the threshold of a new era where an increasing number of old people will have to be supported by a shrinking younger workforce. Peter Day finds out whether this is a threat to the way we live now or an opportunity for new kinds of business 3/ The Independent - The Science of Success: Hamish McRae on what works – and why - Extracts from the new book by Hamish McRae. When Hamish McRae set out to discover the secrets of the world’s most successful organisations, communities and companies, he found eye-opening life lessons for us all 4/ The Telegraph - Manchester United aim to raise £500m in bond sale in bid to reduce mounting debt - another example of companies using the bond market as a source of finance rather than borrowing from retail banks or issuing equity through the stock market 5/ Growing business online - Chemist Direct founder unveils office supply offshoot - the corporate stationery market is dominated by Ryman, Viking Direct and Staples. Chemist Direct founder Mitesh Soma has launched an online stationery firm that is aiming to win business by undercutting these established players - a good example of how a different business model can possible have a destructive effect on existing market dominance to make the market more contestable. A2 Micro, AS Micro, Business Economics, Competitive Markets, Teaching of Economics, 2010-01-11T20:32:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/intel-sued-by-ftc http://www.tutor2u.net/blog/index.php/economics/comments/intel-sued-by-ftc#When:14:25:00Z At the end of December, the US Federal Trade Commission decided to sue Intel for anti-competitive behaviour, accusing the world’s biggest chipmaker of abusing its dominant market position over the past decade. “Intel has engaged in a deliberate campaign to hamstring competitive threats to its monopoly,” said Richard Feinstein, director of the FTC’s Bureau of Competition. This is an excellent case study of the potential anti-competitive behaviour by monopolies in the market place. AS Micro, Business Economics, Competitive Markets, Management Issues, Monopoly, Oligopoly, Competition Policy, 2010-01-10T14:25:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/google-turns-to-mobile-phones http://www.tutor2u.net/blog/index.php/economics/comments/google-turns-to-mobile-phones#When:14:09:01Z Following on from Geoff’s entry last week on the Nexus One, Google’s foray into the mobile business is due to a desire to dominate the market for Internet searches, just like it does on laptops and desktop computers. But as this article discusses here, it is not clear whether Google’s strategic decision is a sure-fire winner. A2 Micro, Business Economics, Competitive Markets, Economies of Scale, Management Issues, Oligopoly, Market Failure, Information Failure, 2010-01-10T14:09:01+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/deindustrialisation-10-us-industries-in-jeopardy http://www.tutor2u.net/blog/index.php/economics/comments/deindustrialisation-10-us-industries-in-jeopardy#When:18:58:00Z A fascinating analysis from Business Insider highlights 10 major industries that have been a core part of the US economy which seem to be in terminal decline.  A great resource to begin a lesson looking at issues of business costs, competitiveness and the impact of globalisation on manufacturing. It would be interesting for students to prepare a similar list of UK industries which might suffer a similar fate (there must be some crossover) Business Economics, Competitive Markets, Economies of Scale, Economic Growth, Economics of Technology, Manufacturing Industry, OECD Economies, US Economy, 2009-12-14T18:58:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/bordering-bankruptcy http://www.tutor2u.net/blog/index.php/economics/comments/bordering-bankruptcy#When:18:55:00Z Almost exactly a year to the day from when Woolworths announced it was going into administration, Borders (UK) last week announced the same. It was only last year, that this tutor2u entry on Borders trying to outcompete Amazon was written. The results have been anything but good (but does provide an interesting case study on contestability, competitive forces and the effect of the Internet on competition). Business Economics, Competitive Markets, Management Issues, 2009-12-06T18:55:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/price-comparison-sites http://www.tutor2u.net/blog/index.php/economics/comments/price-comparison-sites#When:22:59:14Z An interesting discussion out of a random statement at the dinner table last night… There’s a firm called BetGenius which provides real-time odds comparison services. Lots of discussion ensued on the effect of perfect information vs imperfect information. Given the surge in price comparison websites in recent years, one would expect the price of bets (or insurance, electricity) to converge to similar levels, as perfect competition predicts. A2 Micro, Business Economics, Competitive Markets, Price Discrimination, Market Failure, De-Merit Goods, Information Failure, 2009-11-29T22:59:14+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/oft-pricing-investigation http://www.tutor2u.net/blog/index.php/economics/comments/oft-pricing-investigation#When:17:01:01Z When discussing the role of the OFT to protect the public interest, this announcement may be an interesting discussion point: This week it announced it would investigate various online pricing strategies such as drip pricing; time-limited sales; and reference pricing. A2 Micro, Business Economics, Competitive Markets, Price Discrimination, 2009-11-27T17:01:01+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/super-fast-food-nation http://www.tutor2u.net/blog/index.php/economics/comments/super-fast-food-nation#When:12:02:00Z The Independent yesterday carried an article on the continued rapid growth of fast food businesses in the UK. Across over 700 UK town centres the number of outlets for EAT, Pret A Manger, Dominos, KFC and Subway is expanding whereas Wimpy, Burger King and MacDonald’s have seen a reduction in outlets (partly a strategic refocusing of where to locate). Total market demand seems flat and perhaps declining. “In the 10 biggest cities, fast-food outlets soared by 8.2 per cent to 1,456 premises, with London, Edinburgh and Glasgow leading the way…according to the consultancy Allegra Strategies, the value of the informal eating-out market in the UK actually shrank by 0.5 per cent to £40.3bn in 2009.” Here is the link - there is value here for students looking at the fast food industry as a case study of imperfect competition / contestable markets A2 Micro, Business Economics, Competitive Markets, Monopolistic Competition, Market Equilibrium and Price, Nature of Supply, Teaching of Economics, 2009-11-26T12:02:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/caffeinated-stimulus-to-demand http://www.tutor2u.net/blog/index.php/economics/comments/caffeinated-stimulus-to-demand#When:10:03:00Z Coffee shops seem - by and large - to be surviving the recession and, in many cases thriving. The number of independent coffee stores has grown by more than 7% in the last year. Across the country hundreds of new stores have opened. This doesn’t make coffee an inferior good - whose demand rises as real income falls. Instead there are stronger forces at work, for example the rise of the nomadic entrepreneur who prefers to work away from expensive offices. Hugh Pym provides an overview of the strength of retail coffee demand in this piece from BBC news. London has the highest concentration of coffee stores in the UK followed by Edinburgh. Not every brand is enjoying the same performance. Costa Coffe which has 974 stores in the UK has reported like-for-like sales growth yesterday of 2.5 per cent in the six months to the end of August. Caffè Nero, which has almost 400 UK outlets, is believed to be trading at a similar level to Costa, although Starbucks has like-for-like sales down by an estimated 4.5 per cent to 5 per cent in recent months. Brand fatigue in action. A2 Micro, AS Micro, Business Economics, Competitive Markets, Market Equilibrium and Price, Nature of Demand, Price Mechanism in Action, 2009-11-06T10:03:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/rbs-lloyds-sell-off http://www.tutor2u.net/blog/index.php/economics/comments/rbs-lloyds-sell-off#When:18:51:00Z The UK market has fewer bank brands than most other countries and choice has fallen in recent years after the Spanish bank, Santander bought up Abbey, Alliance & Leicester and Bradford & Bingley, and Lloyds has taken over all of HBOS’s brands. However, as per a ruling from the European Commission, RBS will sell 318 branches while Lloyds will dispose of more than 600 branches over the next four years. A2 Micro, Business Economics, Competitive Markets, Oligopoly, Government Intervention, Regulation, 2009-11-03T18:51:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/monopoly-and-entry-barriers-teacher-presentation http://www.tutor2u.net/blog/index.php/economics/comments/monopoly-and-entry-barriers-teacher-presentation#When:19:41:00Z This updated presentation provides an overview of the role of barriers to entry in protecting the position of a monopolist. Launch interactive version of presentation Download pdf slide handouts AS and A2 Specifications, AQA Economics Unit 3, Economics Presentations, EdExcel Economics Unit 3, A2 Micro, Business Economics, Competitive Markets, Monopoly, 2009-11-01T19:41:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/market-concentration-illustrated-banking-brands-after-the-crunch http://www.tutor2u.net/blog/index.php/economics/comments/market-concentration-illustrated-banking-brands-after-the-crunch#When:20:14:00Z A terrific illustration here of how the global banking market has changed in terms of its market shares and concentration ratio recently. A2 Micro, Business Economics, Competitive Markets, Global Economy, Credit Crunch, 2009-10-21T20:14:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/kindlenomics http://www.tutor2u.net/blog/index.php/economics/comments/kindlenomics#When:15:29:00Z Amazon has announced that it will start shipping the Kindle e-reader in the next few days. Leander McCormick-Goodhart is doubtful about whether this spells the end of books. The Kindle device is part of an increasingly contestable market space whose size is set to rise sharply in the months and years to come. I have added a few links to Leander’s blog post. According to Chris Nuttall in an FT blog last month “there are now more than 45 e-reader models available worldwide, according to E Ink, the dominant technology provider for their displays.” A2 Micro, AS Micro, Business Economics, Competitive Markets, Economies of Scale, Oligopoly, Economic Growth, Economics of Technology, Market Equilibrium and Price, Nature of Demand, Price Mechanism in Action, Teaching of Economics, 2009-10-11T15:29:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/ticketmaster-live-nation-merger-provisionally-blocked-by-the-cc http://www.tutor2u.net/blog/index.php/economics/comments/ticketmaster-live-nation-merger-provisionally-blocked-by-the-cc#When:08:13:00Z This morning, the Competition Commission announced that it has provisionally moved to block the merger between Ticketmaster (the world’s largest ticketing firm) and Live Nation (the world’s biggest concert promoter). A2 Micro, Business Economics, Competitive Markets, Monopoly, Oligopoly, Competition Policy, Government Intervention, Regulation, 2009-10-08T08:13:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/price-elasticity-of-demand-for-stamps http://www.tutor2u.net/blog/index.php/economics/comments/price-elasticity-of-demand-for-stamps#When:20:04:00Z The BBC reports that PostComm - the postal service industry regulator has given initial backing for Royal Mail to increase the cost of a standard first-class stamp by three pence. This would take the price up to 42p. At the same time, standard second-class stamps may rise by 2p to 32p. How will consumers respond to the price change? For many the price hike will have little effect - most of the stamps that I buy can be reclaimed as stationery expenses. But many smaller businesses spend heavily on mailshots as a part of their marketing. A rise in mail costs may cause them to consider making more effective use of their customer databases so that - for example - a 3000 mail shot volume is better targeted than before. Do you think that the price elasticity of demand for stamps is price inelastic - at least in the short term? The Royal Mail is subject to a price cap agreed with their industry regulator. Since the Royal Mail?s current price control was agreed in 2006, the Royal Mail has lost 9% of its mail volumes over the three year period to April 2009, largely through shrinkage of the total market including 20% of stamped mail. The Royal Mail has also had to face up to increased competition as the postal market has been fully opened up to competition. Shrinking mail volumes has the effect of reducing capacity utilisation of their collection, sorting and delivery capacity and leads to a rise in the unit costs of the business. The Royal Mail is required by law to operate a universal service across the UK; it is a business that requires substantial economies of scale to remain profitable.   A2 Micro, AS Micro, Business Economics, Competitive Markets, Economies of Scale, Competition Policy, Government Intervention, Maximum Prices, Market Equilibrium and Price, Elasticity of Demand, Nature of Demand, 2009-10-05T20:04:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/mclarens-new-super-sports-car-income-elasticity-and-status-races http://www.tutor2u.net/blog/index.php/economics/comments/mclarens-new-super-sports-car-income-elasticity-and-status-races#When:18:34:01Z We are told that this new product has been forty-five years in the making. McLaren has unveiled its new super sports car, designed using Formula 1 technology. This BBC video offers a sneak preview of the new car and it might be a good one to use when discussing needs and wants! Or the income elasticity of demand for luxury products and the price premium for motorists already wetting themselves in anticipation of getting behind the wheel! Given the relative absence of economies of scale in production, you might get students to estimate the likely introductory price in the market? At a pinch I would price it between £175,000 and £200,000 but then again I am happy to potter around in a nine year old Citroen that is just a year from the knackers yard. A2 Micro, AS Micro, Business Economics, Competitive Markets, Economic Growth, Economics of Technology, Market Equilibrium and Price, Elasticity of Demand, Nature of Demand, Transport Economics, 2009-09-10T18:34:01+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/hold-the-phone http://www.tutor2u.net/blog/index.php/economics/comments/hold-the-phone#When:18:45:00Z For those of you are thinking of buying an iPhone, you would probably do well to wait until Christmas it seems. The exclusivity agreement between Telefonica-O2 and Apple is set to expire in the next few months, which could lead to an all-out price-war in time for the festive season. As the exclusivity is removed, it should make the market more contestable, and the price should fall. A2 Micro, Business Economics, Competitive Markets, Oligopoly, Price Discrimination, 2009-09-09T18:45:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/orange-t http://www.tutor2u.net/blog/index.php/economics/comments/orange-t#When:17:37:00Z Is this going to be the new name of the proposed merger between T-Mobile and Orange? A2 Micro, Business Economics, Competitive Markets, Economies of Scale, Management Issues, Oligopoly, 2009-09-08T17:37:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/world-trade-organisation http://www.tutor2u.net/blog/index.php/economics/comments/world-trade-organisation#When:19:06:00Z Whilst unlikely to be fully resolved any time soon, the WTO has got around to producing its (unhelpfully, confidential!) ruling on whether European government loans to Airbus for aircraft development are illegal subsidies or not. A2 Macro, Business Economics, Competitive Markets, Competition Policy, Government Intervention, Subsidies, International Trade, 2009-09-07T19:06:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/oracle-sun-merger http://www.tutor2u.net/blog/index.php/economics/comments/oracle-sun-merger#When:16:49:01Z Despite getting clearance from the U.S Department of Justice, earlier this month, Europe’s top competition regulator today opened a full, in-depth inquiry into the proposed $7.4bn acquisition of Sun Microsystems by Oracle, citing concerns about the potential for anti-competitive effects if the merger went ahead unconditionally. A2 Micro, Business Economics, Competitive Markets, Economies of Scale, Monopoly, Oligopoly, Competition Policy, Economic Growth, Economics of Technology, Government Intervention, 2009-09-03T16:49:01+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/browser-wars http://www.tutor2u.net/blog/index.php/economics/comments/browser-wars#When:16:09:00Z Over the summer, it seems that the browser wars have intensified, and Microsoft’s Internet Explorer’s virtual monopoly has its days numbered. Earlier this year, Google brought out its Chrome browser, to rival Microsoft’s Internet Explorer, and today it was announced that Google have signed a deal to get it in to Sony PCs. A2 Micro, Business Economics, Competitive Markets, Monopoly, Oligopoly, Competition Policy, Economic Growth, Economics of Technology, Market Equilibrium and Price, Price Mechanism in Action, 2009-09-01T16:09:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/game-on http://www.tutor2u.net/blog/index.php/economics/comments/game-on#When:11:19:00Z Oligopolistic theory predicts that firms in such a market structure will tend to prefer non-price competition rather than price competition due to the self-defeating outcome of a price-war. A2 Micro, Business Economics, Competitive Markets, Oligopoly, 2009-08-27T11:19:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/toshiba-comes-on-board-blu-ray http://www.tutor2u.net/blog/index.php/economics/comments/toshiba-comes-on-board-blu-ray#When:07:30:01Z In February 2008 senior executives of Toshiba made a tearful farewell to their attempts to make the HD-DVD format a success over their rival Blu-Ray. The decision became inevitable after Warner Bros, Sony Pictures, Walt Disney and Twentieth Century Fox said they would only release their films in the Blu-ray format. Sixteen months later Toshiba is to start making products that can play Blu-ray discs. A2 Micro, Business Economics, Competitive Markets, 2009-08-11T07:30:01+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/economics-snapshot-hedging-the-fuel-price http://www.tutor2u.net/blog/index.php/economics/comments/economics-snapshot-hedging-the-fuel-price#When:11:01:00Z Hedging is a way of reducing uncertainty over the future path of volatile commodity prices such as the cost of fuel. One the most important decisions that an airline can take is the extent to which it uses hedging to lock in the price of a barrel of kerosene for a period of six or twelve months. Ryanair provides a good example of how this can have a decisive effect on profitability. Late in 2008 Ryanair was hedged into paying the equivalent of $125 a barrel for kerosene just as the world price price of oil was collapsing to below $40 a barrel - the result was higher operating costs and a Euro 150 million hit on profits. For 2009 around four-fifths of Ryanair’s fuel requirements are locked in at $62 a barrel which with oil prices nudging up towards $70 a barrel will give the airline much needed breathing space as the recession affects demand for seats and forces many airlines to cut prices still further to maintain a profitable level of load-factor (the percentage of seats on each flight that are filled). *Ryanair is now Europe’s largest airline having overtaken Lufthansa and British Airways *In the last twelve months nearly 60 million passengers have flown with the airline *With a market capitalisation of £4.6 billion, Ryanair is larger than the German flag carrier and easily more than twice the size of BA. *Ryanair has a 28% stake in rival Irish airline Aer Lingus and has tried several times to take it over - so far without success! A2 Micro, AS Micro, Business Economics, Competitive Markets, Oil and Gas, Market Equilibrium and Price, Nature of Supply, Price Volatility, Transport Economics, 2009-07-28T11:01:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/windows-for-a-new-generation http://www.tutor2u.net/blog/index.php/economics/comments/windows-for-a-new-generation#When:08:41:00Z It seems that Joseph Schumpeter’s process of creative destruction is still going full throttle ahead, with Google’s announcement this week of a operating system (Chrome OS) to rival Microsoft’s dominance through Windows. A2 Micro, Business Economics, Competitive Markets, Economies of Scale, Oligopoly, Economic Growth, Economics of Technology, 2009-07-09T08:41:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/rogue-oil-traders http://www.tutor2u.net/blog/index.php/economics/comments/rogue-oil-traders#When:12:16:00Z It is generally assumed that the oil market is an oligopolistic market with output dominated by a few large players; whilst the consumers in the market are price-takers, given the significant number of consumers that exist.  However, (allegedly) it seems that a trader at PMV Oil Futures has managed to move the market all by himself. A2 Micro, AS Micro, Business Economics, Competitive Markets, Oligopoly, Commodities Markets, Market Equilibrium and Price, Nature of Demand, Price Mechanism in Action, 2009-07-05T12:16:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/et-phone-home http://www.tutor2u.net/blog/index.php/economics/comments/et-phone-home#When:08:02:00Z The role of competition commissions around the world is to protect the public interest, particularly against firms abusing their dominant positions.  In this light, another victory has been struck by the EU Competition Commission today as an earlier judgement comes finally into force as the cost of sending text messages when abroad has been capped.  We’ve also seen a fall in the maximum charge for receiving and making a phone call, whilst abroad. A2 Micro, Business Economics, Competitive Markets, Oligopoly, 2009-07-01T08:02:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/less-is-more-universal-phone-chargers http://www.tutor2u.net/blog/index.php/economics/comments/less-is-more-universal-phone-chargers#When:15:35:00Z We’ve all experienced the scenario at some point – you go away for the weekend and you’ve left your mobile phone charger at home, but all your friends have different phones and none of their chargers fits your phone. Well, you may never have to go through that frustration again! An agreement has almost been reached on universal phone chargers A2 Micro, AS Micro, Business Economics, Competitive Markets, 2009-06-30T15:35:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/land-grabs-and-market-power-in-retailing http://www.tutor2u.net/blog/index.php/economics/comments/land-grabs-and-market-power-in-retailing#When:12:45:00Z The Observer carries an article today which focuses on what appears to be a spending spree by cash-rich supermarkets to take advantage of falling demand for and prices in the commercial property market. A2 Micro, AS Micro, Business Economics, Competitive Markets, Monopoly, Government Intervention, Regulation, Recession Watch, 2009-06-28T12:45:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/ofcom-on-sky http://www.tutor2u.net/blog/index.php/economics/comments/ofcom-on-sky#When:12:12:00Z The distribution row between Sky and Virgin last year emphasised the competition issues in the UK Pay TV market. Thus it is interesting to note today’s proposal by Ofcom that rival broadcasters should be allowed access to Sky content at regulated prices. A2 Micro, Business Economics, Competitive Markets, Monopoly, Oligopoly, 2009-06-26T12:12:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/how-a-television-monopoly-ended-in-mediocrity http://www.tutor2u.net/blog/index.php/economics/comments/how-a-television-monopoly-ended-in-mediocrity#When:09:01:00Z The standard neo-classical theory presents a monopoly as a “bad” entity that will lead to inefficiency in the form of higher prices, lower consumer surplus, abuse of market dominance, x-inefficiency, etc etc… A2 Micro, Business Economics, Competitive Markets, Monopoly, 2009-06-25T09:01:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/king-of-shaves-takes-on-wilkinette http://www.tutor2u.net/blog/index.php/economics/comments/king-of-shaves-takes-on-wilkinette#When:22:00:00Z Will King, Founder and CEO of the fast-growing King of Shaves brand gave a superb presentation to the National Conference for Economics Teachers in London last week. The business was founded in 1993 and sixteen years later King of Shaves is making significant in-roads into the market for male and female shaving and grooming products. The battle against Wilkinette is well and truly joined but - as with most entrepreneurial success stories - the challenge of establishing a foothold in an oligopolistic market dominated by two corporate giants has not been smooth. A2 Micro, AS Micro, Business Economics, Competitive Markets, Management Issues, Market Equilibrium and Price, Nature of Demand, Teaching of Economics, 2009-06-21T22:00:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/the-tragedy-of-the-commons-on-film http://www.tutor2u.net/blog/index.php/economics/comments/the-tragedy-of-the-commons-on-film#When:06:56:00Z The fishing industry is regularly under investigation, and not just in the EU, in an endless attempt to avoid the Tragedy of the Commons and maintain a sustainable level of production. The links below to previous blog items show that this topic is under constant review, and it is now being strengthened by a new film release. ‘The End of the Line’ is a film about the global fishing industry which will open in the UK cinemas next Monday, having previewed at the Sundance Festival in Utah earlier this year. The documentary claims to be to the marine environment what An Inconvenient Truth was to global warming, exposing the huge over-capacity of the fishing industry and inefficient, poorly enforced regulation. There are some extreme statistics: the industry has capacity which would allow it to catch four times the current annual output. The world’s long-lining industry sets 1.4 billion hooks every year. These are estimated to be set on enough line to encircle the entire globe more than 550 times. The mouth of the largest trawling net is big enough to accommodate 13 747 jets. Business Economics, Competitive Markets, Commodities Markets, Environmental Economics, European Economy, EU Farming and Fishing, Government Intervention, Government Failure, International Trade, Market Failure, Development Economics, 2009-06-02T06:56:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/trade-secrets-at-irn-bru http://www.tutor2u.net/blog/index.php/economics/comments/trade-secrets-at-irn-bru#When:15:43:00Z Here is a good example of the importance that some busineses attach to their trade secrets! A2 Micro, AS Micro, Business Economics, Competitive Markets, Management Issues, Market Equilibrium and Price, Nature of Supply, 2009-05-29T15:43:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/revision-market-structure-conduct-and-performance http://www.tutor2u.net/blog/index.php/economics/comments/revision-market-structure-conduct-and-performance#When:08:12:00Z A revision PowerPoint presentation on structure, conduct and performance in markets - designed for A2 micro Presentation Market_Structure_Revision.ppt A2 Micro, Business Economics, Competitive Markets, Monopolistic Competition, Monopoly, Oligopoly, 2009-05-22T08:12:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/revision-contestable-markets http://www.tutor2u.net/blog/index.php/economics/comments/revision-contestable-markets#When:19:21:00Z William Baumol defined contestable markets as existing where “An entrant has access to all production techniques available to the incumbents, is not prohibited from wooing the incumbent’s customers, and entry decisions can be reversed without cost.” For a contestable market to exist there must be low barriers to entry and exit so that new suppliers can come into a market to provide fresh competition. For a perfectly contestable market, entry into and exit out must be costless AS and A2 Specifications, AQA Economics Unit 3, EdExcel Economics Unit 3, A2 Micro, Business Economics, Competitive Markets, Monopoly, Competition Policy, Teaching of Economics, 2009-05-15T19:21:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/hmv-diversifies-into-cinemas http://www.tutor2u.net/blog/index.php/economics/comments/hmv-diversifies-into-cinemas#When:11:11:00Z Here is a great example of business diversification and growth through joint venture.  HMV is entering into a joint venture with cinema chain Curzon Artificial Eye to open a cinema called hmvcurzon above its Wimbledon store. A2 Micro, AS Micro, Business Economics, Competitive Markets, Oligopoly, GCSE Economics, 2009-04-28T11:11:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/contestable-markets-the-market-for-smart-phones http://www.tutor2u.net/blog/index.php/economics/comments/contestable-markets-the-market-for-smart-phones#When:12:42:35Z In AS microeconomics the examiner may set you a question about the effects of a new supplier entering a market. There are also frequent questions on the costs and benefits of competitive markets compared to industries dominated by a monopolist or a handful of new firms. In A2 economics, contestable markets form an important part of your study of the theory of market structures, economic welfare and efficiency. Tim Weber, Business editor of the BBC News website has written a superb article on the competitive pressures building inside the mobile phone market – “as the market for high-end mobiles gets ever more crowded, which should you pick?” – this is a classic tale of a market space become evermore congested as the likes of Apple, Microsoft, Research in Motion and Symbian (developers of the software that run most of Nokia’s smart-phones) compete with each other for a share of the lucrative corporate and personal sector market. It is a market where performance, functionality, speed and reliability of access, look and feel of the hardware and the length of battery life are all important non-price factors influencing consumer preferences. Price is significant – and the article makes reference to the need to attract heat-seekers or ‘early adopters’ – consumers who are willing to pay a premium price for being among the first to be seen using a new piece of kit. Despite the obvious barriers to entry for new participants, the smart-phone market is increasingly contestable even though it is dominated by a handful of major players. The increasing use of open-source software has helped to make the battle for market dominance a more intense affair. Far from being geeky, this is an article that gives you a super case study in how the existing operators are competing with each other. How will the market for smart-phones be affected by the recession? The article is available here: Regular articles on the economics of contestable markets appear on my blog here: A2 Micro, AS Micro, Business Economics, Competitive Markets, Economies of Scale, 2008-12-16T12:42:35+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/spew http://www.tutor2u.net/blog/index.php/economics/comments/spew#When:23:18:00Z A hat tip to a fellow presenter on our revision workshops in London whose acronym to remember some of the effects of monopoly power in markets struck a chord with me SPEW Service - does the lack of competition affect the quality of service to consumers? Prices - how high are prices compared to competitive / contestable market Efficiency - productive, allocative and dynamic Welfare - what are the overall welfare outcomes? Is there a net loss of welfare in markets dominated by businesses with monopoly power? Are there anymore useful revision acronyms out there that you use? Please share them via the blog!   A2 Micro, AS Micro, Business Economics, Competitive Markets, Monopoly, 2008-12-01T23:18:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/betting-on-perfect-competition http://www.tutor2u.net/blog/index.php/economics/comments/betting-on-perfect-competition#When:21:15:37Z One of the annual rituals for A2 Economics teachers is the lesson when we cover the assumptions that lie behind the model of perfect competition and ask the perennial question - are there any real-world industries that come close to this particular market structure? In the past I have used local fruit markets, clusters of nightclubs or bars in busy tourist venues and auctions for newly caught fish as examples of markets which satisfy some of the criteria needed for perfect competition to exist. It allows one to discuss the importance of low entry and exit costs into and out of the market; the significance of many sellers supplying essentially homogeneous products and the role that price transparency plays in shaping the incentives of buyers and sellers. A colleague suggested to me a few weeks ago that his local racecourse provided a suitable example to use. He is often to be found at summer and early autumn meetings after school in the evening, enjoying the occasional bet, a stunning location but more importantly the chance to watch competitive markets in action - namely on-course betting! A2 Micro, AS Micro, Business Economics, Competitive Markets, Market Equilibrium and Price, Price Mechanism in Action, 2008-10-29T21:15:37+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/can-the-royal-mail-continue-to-provide-a-universal-postal-service http://www.tutor2u.net/blog/index.php/economics/comments/can-the-royal-mail-continue-to-provide-a-universal-postal-service#When:16:24:00Z The Royal Mail produced some pretty decent results last week. Their operating profit for the first six months of their financial year doubled to £177million - a welcome return to profitability for a mail network that has come under huge pressure from increasing competition within the recently deregulated market. A2 Micro, AS Micro, Business Economics, Competitive Markets, GCSE Economics, Government Intervention, 2008-10-27T16:24:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/exiting-the-market http://www.tutor2u.net/blog/index.php/economics/comments/exiting-the-market#When:20:25:01Z We have been discussing in our microeconomics classes, examples of businesses that have exited a particular market - reallocating their resources into what they hope and expect will be more profitable avenues. A business-collapse or implosion is an obvious example of when there is a net loss of firms from a marketplace, for example the collapse of several low-cost airlines this year and the closure of many businesses linked to the ailing housing market. A2 Micro, AS Micro, Business Economics, Competitive Markets, 2008-09-23T20:25:01+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/supermarkets-battle-for-market-share-in-retail-clothing http://www.tutor2u.net/blog/index.php/economics/comments/supermarkets-battle-for-market-share-in-retail-clothing#When:10:12:00Z Marks and Spencer and Primark take the top two places in the retail clothing market - and behind them the major supermrkets have been engaged in a fierce battle for the low-price, high volume segment of the market beloved of households who replace tee-shirts and underwear rather than wash and iron them. So who is winning? Most people would figure Tesco was in the lead, the latest figures suggest something different. Business Economics, Competitive Markets, GCSE Economics, 2008-09-14T10:12:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/aldis-explosive-growth-can-it-break-through http://www.tutor2u.net/blog/index.php/economics/comments/aldis-explosive-growth-can-it-break-through#When:07:58:00Z “Don’t change your lifestyle, change your supermarket” Food market share Tesco: 31.6% Asda: 17% Sainsbury’s: 15.8% Morrisons: 11.1% Somerfield: 3.7% Waitrose: 3.8% Aldi: 3.0% Lidl: 2.4% Iceland: 1.7% Netto: 0.7% % sales of total grocers in 12 weeks to 12 August 2008 That is the Aldi strap-line as it seeks to change the shopping habits of price conscious consumers across the UK. The dramatic sales growth from the deep-discount food retailers is one of the big stories of 2008 and German-owned Aldi is planning to add one new store a week to its portfolio in a significant bid at organic growth and rising market share. The Telegrpah provides this analysis of the rise of the Aldi chain and how their retail model is radically different from the 24-hour, sell it all mentally of the likes of Tesco. Is the apparent shift from status to value a product of the times in which we live? or evidence of a longer-lasting change in consumer preferences. I have never set foot in an Aldi or a Lidl store, it might not be long before I do! A2 Micro, AS Micro, Business Economics, Competitive Markets, GCSE Economics, Market Equilibrium and Price, Elasticity of Demand, 2008-09-10T07:58:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/web-browser-war-hots-up-with-release-of-chrome http://www.tutor2u.net/blog/index.php/economics/comments/web-browser-war-hots-up-with-release-of-chrome#When:22:08:01Z How many of you downloaded and installed Google’s new web browser Chrome? For the first time I now have four web browsers on my desktop and to be honest it makes a neat change to have the option when loading up for some web searching. The five way battle for web browsers provides a useful mini case study in the essence of contestable markets. A2 Micro, AS Micro, Business Economics, Competitive Markets, 2008-09-09T22:08:01+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/cycling-on-a-roll-competitive-advantage-in-action http://www.tutor2u.net/blog/index.php/economics/comments/cycling-on-a-roll-competitive-advantage-in-action#When:15:56:00Z Much has been written about the factors behind the success of the GB cycling team in the Beijing Olympics. Some commentators are drawing parallels with the World Cup winning team in the Rugby World Cup of 2003 and for students of economics, there are some useful insights into what determines competitive advantage in markets. A2 Micro, AS Micro, Business Economics, Competitive Markets, 2008-08-21T15:56:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/apples-dilemma-resolved-by-falling-pound http://www.tutor2u.net/blog/index.php/economics/comments/apples-dilemma-resolved-by-falling-pound#When:21:41:00Z Earlier this year Apple was accused of engaging in some blatant price discrimination by selling download tracks at a higher price in mainland Europe compared to the UK. They responded by saying that they wanted to bring in a “standardised price” within months. Well now the falling pound against the Euro seems to have done the job for them - according to this BBC report - “exchange rate changes since January mean 0.99 euros now equals 79p, meaning no price cut is necessary, Apple said” Still no explanation for why download prices are cheaper in the USA? I haven’t downloaded a song from iTunes for months - there is now much more competitoon - but I am happy enough downloading the free podcasts to keep me happy!   AS Micro, Business Economics, Competitive Markets, Price Discrimination, Market Equilibrium and Price, Price Mechanism in Action, 2008-07-19T21:41:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/somerfield-walks-down-the-aisle-with-the-co-op http://www.tutor2u.net/blog/index.php/economics/comments/somerfield-walks-down-the-aisle-with-the-co-op#When:14:37:00Z Consolidation continues apace in the UK food retail sector. Yesterday the Co-op (a mutual owned by its 2.5 million members) acquired Somerfield (owned by a private equity fund) for £1.57bn in an example of horizontal integration designed explicitly to give the Co-op the opportunity to achieve greater economies of scale across its business. The combined market share of the newly merged business will be around 8% - less than half the share enjoyed by each of the next biggest retailers Sainsburys and Walmart (Asda). A2 Micro, AS Micro, Business Economics, Competitive Markets, 2008-07-17T14:37:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/borders-v-amazon http://www.tutor2u.net/blog/index.php/economics/comments/borders-v-amazon#When:20:25:00Z Borders has broken away from Amazon after seven years to launch its own standalone website - the UK version is still in beta testing mode and you can sign up to be a tester ahead of the full roll-out. According to Publishers Weekly “Borders.com will have a total of 2 million books/DVDs/music in its inventory. In addition, in an agreement with Alibris, Borders will now offer about 60 million used books for sale. The site also features a link to its cobranded e-bookstore with Sony and has the ability to download digital audio either in DRM or DRM-free formats.” What chance do you think that Borders has of breaking the stranglehold of Amazon in UK online book buying? Are the barriers to entry likely to prove insurmountable? Business Economics, Competitive Markets, 2008-06-15T20:25:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/has-competition-in-postal-services-delivered http://www.tutor2u.net/blog/index.php/economics/comments/has-competition-in-postal-services-delivered#When:19:25:00Z Two years on from the liberalisation of the postal services industry, has this supply-side policy to make the market more contestable made any noticeable difference to the quality of service, prices and investment in delivery? A new report casts doubt on the changes to the industry since the market opened up to competition at the start of 2006 to businesses such as UK Mail. Robert Peston reports for the BBC in this video clip. His feature asks whether the universal service provision is a millstone round the neck of the Royal Mail which remains in deep financial trouble. A2 Micro, AS Micro, Business Economics, Competitive Markets, Supply-side policies, 2008-05-07T19:25:00+00:00