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/russias-monopoly-power-over-gas-supplies http://www.tutor2u.net/blog/index.php/economics/comments/russias-monopoly-power-over-gas-supplies#When:08:47:23Z It has been a bit chilly in the UK for the last few days, but nothing compared to the temperatures as low as -35 which have hit parts of central and eastern Europe. Of course, they are used to far colder winters than us, and have different ways of dealing with the weather, but reliance on gas supplies from Russia for the majority of their heating fuel leaves countries including Bulgaria, Serbia and Bosnia vulnerable to disruption in that supply. AS Micro, Emerging Economies, Russia Economy, Business Economics, Monopoly, Market Failure, Externalities, 2012-02-05T08:47:23+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/unit-3-micro-oligopoly-and-duopoly-in-bus-markets http://www.tutor2u.net/blog/index.php/economics/comments/unit-3-micro-oligopoly-and-duopoly-in-bus-markets#When:15:01:48Z The UK Competition Commission has published an important report into the market structure of local and regional bus services in the UK, twenty five years after the industry was deregulated and largely privatised. Coverage of the report can be found here (BBC news). Largely as a result of a long-term process of consolidation through merger and acquisition, the UK bus industry is found to be highly concentrated with five businesses dominating the sector even though more than 1,200 businesses provides services. The five largest operators (Arriva, FirstGroup, Go-Ahead, National Express and Stagecoach) carry 70 per cent of those passengers. The CC also found that head-to-head competition between operators is un-common and that-on average-the largest operator in an urban area runs 69 per cent of local bus services - effectively a monopoly position. AS and A2 Specifications, AQA Economics Unit 3, EdExcel Economics Unit 3, A2 Micro, AS Micro, Business Economics, Monopoly, Oligopoly, Competition Policy, Market Equilibrium and Price, Nature of Supply, Transport Economics, UK Economy, Regional Economics, 2011-12-20T15:01:48+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/unit-3-micro-patent-wars-a-touchy-subject-for-apple http://www.tutor2u.net/blog/index.php/economics/comments/unit-3-micro-patent-wars-a-touchy-subject-for-apple#When:17:24:57Z This excellent news piece from Ben Cohen at Channel 4 looks at the increasingly aggressive patent war being fought by the manufacturers of the world’s leading mobile phone and tablet devices - the most profitable products in the digital economy. “Where once the giants (Google and Apple) competed on features, they now compete on patents.” The news feature looks in particular at the intellectual property surrounding the slide-screen technology used by millions to unlock a device. Apple claims the IP to this but a video tracked back to twenty years ago suggests that developers were already thinking of something remarkably similar long before the iPhone came into existence. Can the makers of Android defend legal claims from Apple that their IP has been infringed? And who will end up paying for the enormous legal fees and possible extra licencing costs?   AS and A2 Specifications, AQA Economics Unit 3, EdExcel Economics Unit 3, A2 Micro, Business Economics, Monopoly, Oligopoly, Economic Growth, Economics of Technology, European Economy, Single Market, Government Intervention, Regulation, Market Equilibrium and Price, Nature of Demand, Teaching of Economics, 2011-12-16T17:24:57+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/the-christmas-tree-of-integration http://www.tutor2u.net/blog/index.php/economics/comments/the-christmas-tree-of-integration#When:15:12:26Z A seasonal look at the methods of growth for firms, covering organic growth and the sources of external growth. AS and A2 Specifications, AQA Economics Unit 3, Business Economics, Monopoly, GCSE Economics, 2011-12-15T15:12:26+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/unit-3-micro-examples-of-price-discrimination-in-action http://www.tutor2u.net/blog/index.php/economics/comments/unit-3-micro-examples-of-price-discrimination-in-action#When:13:41:47Z I tweeted earlier on today asking economics teaching colleagues what examples they like to use when teaching the topic of price discrimination under conditions of monopoly / imperfect competition. Thank you to everyone who contributed! AS and A2 Specifications, AQA Economics Unit 3, EdExcel Economics Unit 3, A2 Micro, AS Micro, Business Economics, Monopolistic Competition, Monopoly, Oligopoly, Price Discrimination, Market Equilibrium and Price, Nature of Demand, Price Mechanism in Action, Teaching of Economics, 2011-10-31T13:41:47+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/unit-3-micro-price-discrimination-in-the-e-book-market http://www.tutor2u.net/blog/index.php/economics/comments/unit-3-micro-price-discrimination-in-the-e-book-market#When:09:51:07Z Seth Godin’s Domino Project is an attempt to re-fashion the way in which e-books are published, sold and priced. This blog is particularly interesting for teachers and students who consider different forms of price discrimination. It proposes (at least) three different price tiers: $1.99 ebooks - a clearing price for the majority of e-books $5 ebooks. This is the price for bestsellers, hot titles and academic titles required by courses $10 - $20 ebooks. This is the price you will pay to get the book first, to get it fast, to get it before everyone else Read paying for first What do you think? How do you see e-book pricing tactics evolving as the market grows? The UK Office of Fair Trading is currently investigating the market for e-books in the UK amid allegations of price fixing / collusion by several leading publishers. You can access the OFT investigation using this link. Further reading: Guardian (August 2011): Apple and major publishers face lawsuit over ebook ‘price fixing’ Telegraph: EU raids publishers in ebook price-fixing probe By way of background - new research has found that the average e-book price of front-list e-books across the world was €10.50 net of taxes. The average price of UK frontlist e-books was €10.80, €1.50 more than equivalent US titles, but less than those in Germany, Spain and France. AS and A2 Specifications, AQA Economics Unit 3, EdExcel Economics Unit 3, A2 Micro, AS Micro, Behavioural Economics, Game Theory, Business Economics, Monopoly, Oligopoly, Market Equilibrium and Price, Nature of Demand, Teaching of Economics, 2011-10-31T09:51:07+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/unit-3-micro-you-sue-i-sue-patent-wars-explode http://www.tutor2u.net/blog/index.php/economics/comments/unit-3-micro-you-sue-i-sue-patent-wars-explode#When:20:34:00Z The scale of the legal battles between different businesses in the mobile industry might just be unprecedented. This nifty graphic from the iDownload blog provides an overview of the complex web of litigation - a lawyer’s dream! But if Samsung succeed in delaying the release of the iPhone5 then what might become of their reputation with millions of consumers worldwide? An Indian Summer hat tip to Graham Carter for flagging up this visual. AS and A2 Specifications, AQA Economics Unit 3, EdExcel Economics Unit 3, A2 Micro, Business Economics, Monopoly, Oligopoly, Economic Growth, Economics of Technology, Teaching of Economics, 2011-09-25T20:34:00+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-presentation-on-entry-barriers http://www.tutor2u.net/blog/index.php/economics/comments/revision-presentation-on-entry-barriers#When:18:26:00Z A revised presentation on entry barriers in markets is available here in three formats Streamed presentation Handout (pdf) SCORM VLE Import (Zip File) AS and A2 Specifications, AQA Economics Unit 3, A2 Micro, Business Economics, Monopoly, Teaching of Economics, 2011-05-19T18:26:00+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/a2-micro-consequences-of-price-discrimination http://www.tutor2u.net/blog/index.php/economics/comments/a2-micro-consequences-of-price-discrimination#When:08:25:00Z Who gains and who loses out from persistent and pervasive price targeting by businesses? To what extent does price discrimination help to achieve an efficient allocation of resources? There are many arguments on both sides of the coin – indeed the impact of price discrimination on welfare seems bound to be ambiguous. AS and A2 Specifications, AQA Economics Unit 3, EdExcel Economics Unit 3, A2 Micro, Business Economics, Monopoly, Price Discrimination, 2011-05-19T08:25:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/a2-micro-examples-of-price-discrimination http://www.tutor2u.net/blog/index.php/economics/comments/a2-micro-examples-of-price-discrimination#When:08:22:00Z Price discrimination occurs when a business charges a different price to different groups of consumers for the same good or service, for reasons not associated with costs. AS and A2 Specifications, AQA Economics Unit 3, EdExcel Economics Unit 3, A2 Micro, Business Economics, Monopoly, Price Discrimination, Market Equilibrium and Price, Nature of Demand, 2011-05-19T08:22:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/a2-micro-business-growth http://www.tutor2u.net/blog/index.php/economics/comments/a2-micro-business-growth#When:22:12:00Z This revision note looks at the growth of businesses - we will be adding fresh links at the foot of this blog to recent blog entries on business growth articles and news stories AS and A2 Specifications, AQA Economics Unit 3, EdExcel Economics Unit 3, A2 Micro, Business Economics, Monopoly, 2011-05-18T22:12:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/some-light-relief-from-revision-this-weeks-economics-tv http://www.tutor2u.net/blog/index.php/economics/comments/some-light-relief-from-revision-this-weeks-economics-tv#When:19:17:00Z Here is a selection of this week’s TV (and a bit of radio) that seems to have some good economics content and might provide a welcome, yet useful, break from revision. Sunday 15th May: BBC4 8pm, ‘The Secret Life of the National Grid’ - could be worth a look in terms of economies of scale, network externalities, economic growth and the importance of infrastructure Sunday 15th May: Radio 4 8pm, ‘The Bankers and the Bottom Billion’ - possibly some useful bits in terms of development economics Monday 16th May: BBC1 8.30pm, ‘Panorama’ - this week’s investigative documentary looks at the illegal trade in waste electronic products following the introduction of regulations governing how we can dispose of such things - probably very good in terms of analysing a type of government failure Monday 16th May: BBC1 9pm, ‘The Street That Cut Everything’ - looks rather entertaining as well as providing a bit of an insight into topics such as government spending on public goods and goods that generate positive externalities Monday 16th May: BBC4 9pm, ‘The Golden Age of Canals’ - whilst at first glance this may not seem too appealing, I suspect there are some interesting nuggets in terms of networks and infrastructure spending, as well as a look at why canals fell into obsolence due to the invention of the combustion engine (some creative destruction here!) Tuesday 17th May: BBC3 9pm, ‘Secrets of the Superbrands: Technology’ - a good look at how monopolies put up strategic barriers to entry in terms of branding and smart use of technology to achieve consumer loyalty Thursday 19th May: ITV1 7.30pm, ‘The True Cost of a Car’ - a look at the impact on motorists of rising fuel prices and insurance premiums, which will bring in cross-elasticity of demand in a roundabout way Thursday 19th May: Radio 4, 8pm, ‘The Report’ - a closer look at the operation of supermarkets and why there is opposition to their expansion (useful for looking at the impact of rising market power) Friday 20th May: BBC2 7pm, ‘Wind Farm Wars’ - probably very useful for those sitting AS Unit 1 this summer in terms of negative and positive externalities of production, and the ins and outs of cost-benefit analysis Hopefully there’s some light relief in there for everyone! All of the BBC programmes will be available on iPlayer for several days after they’ve been broadcast. A2 Macro, A2 Micro, AS Macro, AS Micro, Emerging Economies, Development Economics, Business Economics, Economies of Scale, Monopoly, Oligopoly, Cost Benefit Analysis, Economic Growth, Economics of Technology, Government Intervention, Regulation, Market Failure, Externalities, Public Goods, Market Equilibrium and Price, Inter-related Markets, 2011-05-15T19:17:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/wiki-revision-a-to-z-on-monopoly http://www.tutor2u.net/blog/index.php/economics/comments/wiki-revision-a-to-z-on-monopoly#When:21:09:00Z Here is a revision idea. Take a broad topic - in this case the economics of monopoly - and get students to enter items for an A to Z on that topic. Here is an A-Z relating to monopoly, I am sure we have missed out lots of ideas, can you add some in? If so please leave a comment! AS and A2 Specifications, AQA Economics Unit 3, EdExcel Economics Unit 3, A2 Micro, AS Micro, Business Economics, Monopoly, Government Intervention, Market Failure, Teaching of Economics, 2011-04-23T21:09:00+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/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/timetric-price-convergence-within-the-eu http://www.tutor2u.net/blog/index.php/economics/comments/timetric-price-convergence-within-the-eu#When:09:10:00Z Has the growth and development of the European Union single market and the Euro accelerated a process of price convergence within the EU? Price convergence means that the gap in prices for the same good or service has come down and in theory, having one currency and an open market ought to bring down the extent of price variations. Our Timetric chart below tracks what has been happening to the price convergence indicator. A fall in the measure indicates a coming-together of average prices. AS and A2 Specifications, AQA Economics Unit 3, A2 Micro, Business Economics, Monopoly, Price Discrimination, European Economy, Single Market, Market Equilibrium and Price, Price Mechanism in Action, Standard of Living, UK Economy, 2011-03-13T09:10:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/dynamic-efficiency-in-the-condom-market http://www.tutor2u.net/blog/index.php/economics/comments/dynamic-efficiency-in-the-condom-market#When:17:56:01Z Designed by and designed for women, L. is among the first woman-run condom enterprise that sells all natural male condoms for women. Inspired by work in Africa where nine out of 10 African countries goes without condom supplies for more than two months here is an interesting example of an attempt to break into the dominant monopoly of the major condom manufacturers such as Durex. AS and A2 Specifications, AQA Economics Unit 3, A2 Micro, Business Economics, Monopoly, Market Equilibrium and Price, Nature of Demand, 2011-02-15T17:56:01+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/apple-and-goldman-sachs-worlds-apart http://www.tutor2u.net/blog/index.php/economics/comments/apple-and-goldman-sachs-worlds-apart#When:23:43:00Z Here is a fantastic piece from John Cassidy - author of Why Markets Fail - a simply terrific investigation of the different ways that we can measure the rate of return for different business activities. Apple employees earn a lot less than Goldmans’, despite generating a much higher return. AS and A2 Specifications, AQA Economics Unit 1, AQA Economics Unit 3, A2 Micro, AS Micro, Business Economics, Monopoly, Economic Growth, Economics of Technology, Teaching of Economics, 2011-01-19T23:43:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/pricing-tricks-and-behavioural-economics http://www.tutor2u.net/blog/index.php/economics/comments/pricing-tricks-and-behavioural-economics#When:08:58:00Z Martin Hickman’s Consuming Issues column in the Independent this weekend has a piece on some of the tactics used by retailers to take commercial advantage of many of our behavioural biases. These pricing tactics include: AS and A2 Specifications, AQA Economics Unit 1, AQA Economics Unit 3, EdExcel Economics Unit 1, EdExcel Economics Unit 3, A2 Micro, AS Micro, Behavioural Economics, Business Economics, Monopoly, Price Discrimination, Government Intervention, Market Failure, Information Failure, Market Equilibrium and Price, Nature of Demand, Price Mechanism in Action, Teaching of Economics, 2010-12-12T08:58:00+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/does-facebook-have-a-monopoly-over-the-internet http://www.tutor2u.net/blog/index.php/economics/comments/does-facebook-have-a-monopoly-over-the-internet#When:21:45:00Z Obviously, Facebook is not a monopoly in the pure sense - there are, of course, other websites on the internet! However, students studying A2 Economics will be well aware that the working definition of a monopoly, as used by the Competition Commission, is a firm with more than 25% market share. Imagine my surprise, then, when I read this short article from the Boy Genius forum. According to a recent report filed by Experian’s Hitwise group regarding internet usage in the US during the week ending 13th November, one of every four page views took place on facebook.com. This could spark an interesting discussion on whether the 25% definition is necessarily a useful benchmark in all markets. Does Facebook have any degree of control over the internet? AS and A2 Specifications, AQA Economics Unit 1, AQA Economics Unit 3, A2 Micro, AS Micro, Business Economics, Monopoly, Economic Growth, Economics of Technology, Market Equilibrium and Price, Nature of Supply, Teaching of Economics, 2010-11-21T21:45:00+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/experimenting-with-google-docs-the-rise-of-a-digital-conglomerate http://www.tutor2u.net/blog/index.php/economics/comments/experimenting-with-google-docs-the-rise-of-a-digital-conglomerate#When:17:01:00Z I have started using Google docs as a tool for collaborative work between my students. It is early days yet but my aim is to set a discussion question once a week for each group to contribute to, I will credit students for the input they have having reflected on the edit history for the document. Here is our first attempt. The expansion of Google and the economics behind their growth strategy offers interesting avenues for study as part of your A2 micro course. This document asks a simple question “Which industry is Google in?” The answer(s) will reveal much about the nature and ambition of Google as a business and the economics of contestable markets and monopolistic markets. The full document can be downloaded below as a pdf file. AS and A2 Specifications, AQA Economics Unit 3, Business Economics, Monopoly, Economic Growth, Economics of Technology, Teaching of Economics, Digital Learning, 2010-11-08T17:01:00+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/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/just-giving-an-abuse-of-monopoly-power http://www.tutor2u.net/blog/index.php/economics/comments/just-giving-an-abuse-of-monopoly-power#When:09:54:00Z Just Giving has become the market leader in web sites offering charities a platform for raising money online. By some estimates they take over eighty per cent of total charitable giving done online. But there are complaints that Just Giving is abusing their dominant position by charging higher fees that other comparable sites for taking donations - they claim 5pence in every £1. Nigel Cassidy provides this brief video report. A hat tip to Gareth Williams for spotting it. Gareth writes on his Twitter account “Just Giving, an example of abuse of market power or do the consumers benefit from extra dynamic efficiency of a monopoly?” AS and A2 Specifications, AQA Economics Unit 1, AQA Economics Unit 3, EdExcel Economics Unit 3, A2 Micro, AS Micro, Business Economics, Monopoly, Market Failure, Teaching of Economics, 2010-10-30T09:54:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/revision-presentation-on-monopoly-price-and-output http://www.tutor2u.net/blog/index.php/economics/comments/revision-presentation-on-monopoly-price-and-output#When:18:32:00Z Our revised presentation on monopoly price and output is available in three formats Streamed: Handout (pdf) SCORM VLE Import (Zip File) AS and A2 Specifications, AQA Economics Unit 3, A2 Micro, Business Economics, Monopoly, Teaching of Economics, 2010-10-28T18:32:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/competition-in-action-google-vs-the-world http://www.tutor2u.net/blog/index.php/economics/comments/competition-in-action-google-vs-the-world#When:09:24:00Z It is already common knowledge that Google is by far the biggest player in the internet search market (with an 83% share globally at last count). In fact, their search is one of the few products that are so ubiquitous that its name has become a verb. Think about it - would you naturally say “search for it” or “Google it”? Surely, this is the ultimate form of monopoly power. However, many will be less aware of the web giant’s rapid growth in other markets, namely those for internet browsers and smartphone operating systems. Here are links to two articles from the blog Engadget which show how Google’s innovation and rapid product development have made them increasingly competitive in markets that until recently were dominated by other large firms. This could be good as a starter or mid lesson stimulus for a lesson on competition, barriers to entry or even growth strategies of firms. Incidentally, I am one of the many who have bought into the Google franchise and use both the Chrome browser and an Android phone. I have found both excellent so far! Internet Explorer falls below 50 percent global marketshare, Chrome usage triples Android is number one OS among US phone buyers over the last six months 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, Economies of Scale, Monopoly, Economic Growth, Economics of Technology, Teaching of Economics, 2010-10-06T09:24:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/external-growth-googles-acquisition-boom http://www.tutor2u.net/blog/index.php/economics/comments/external-growth-googles-acquisition-boom#When:21:16:00Z Whenever you are studying or teaching the external growth of a business, head over to Wikipedia and check out the list of corporate acquisitions that cash-rich Google has made in recent times. It is an enormous list and one that extends with every passing year. Business Insider focuses on Google in their daily chart This supporting article considers some of the motives behind the boom in acquisitions - not least the desire to attract experts into markets where Google has no substantial track record. A further article here takes you through the details of each acquisition - trying to work out where each investment fits into Google’s growth strategy AS and A2 Specifications, AQA Economics Unit 3, EdExcel Economics Unit 3, A2 Micro, Business Economics, Monopoly, Teaching of Economics, 2010-09-21T21:16:00+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/google-instant-and-dynamic-efficiency http://www.tutor2u.net/blog/index.php/economics/comments/google-instant-and-dynamic-efficiency#When:16:35:00Z Google has 65% of the global web search market and a dominating presence across wide acres of the internet. Last week they launched Google Instant which produces web search results as you type and claims to lower the average time spent searching for a specific site or resource. Rory Cellen-Jones provides some of the commercial background behind this innovation in a BBC News 24 interview - he makes the point that search is the only activity that actually makes Google much money so they simply have to keep expanding what is possible to refine and speed up their search engine technologies. This is a good example of an improvement in dynamic efficiency in the market - to the wider benefit of millions of web users. AS and A2 Specifications, AQA Economics Unit 3, EdExcel Economics Unit 3, A2 Micro, AS Micro, Business Economics, Monopoly, Economic Growth, Economics of Technology, Teaching of Economics, 2010-09-12T16:35:00+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/behavioural-economics-and-competition-policy http://www.tutor2u.net/blog/index.php/economics/comments/behavioural-economics-and-competition-policy#When:16:24:00Z Here is a link to a recent research report from the Office of Fair Trading. It provides a very readable introduction to what behavioural economics is and then asks whether this emerging area of economic thinking can have useful applications in the shaping and handling of competition policy. Great for teachers who want to introduce some behavioural aspects into their teaching of competition policy issues in the UK and in other countries. AS and A2 Specifications, AQA Economics Unit 3, EdExcel Economics Unit 3, A2 Micro, Behavioural Economics, Business Economics, Monopoly, Competition Policy, European Economy, Government Intervention, Teaching of Economics, 2010-08-12T16:24:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/typical-apr http://www.tutor2u.net/blog/index.php/economics/comments/typical-apr#When:23:24:00Z When a friend’s Facebook status mentioned a website offering loans for a TV at 2689% APR, I was intrigued. It sounds astronomically high, doesn’t it? – The answer, as always in Economics, is that “...well it depends…” Firstly, APR stands for annual percentage rate and is the interest payable on the amount borrowed and other charges expressed as an annual rate of charge. Secondly, the website in question is called Wonga.com - “Wonga provides small and super-flexible loans around the clock. We’re here to help solve urgent and short term cash flow problems. Wonga’s business model is based on lending money (maximum £400) for short durations (maximum 30 days). AS and A2 Specifications, AQA Economics Unit 1, EdExcel Economics Unit 1, A2 Micro, AS Micro, Business Economics, Monopoly, Financial Markets, Market Failure, Information Failure, Market Equilibrium and Price, Nature of Demand, Teaching of Economics, Credit Crunch, 2010-08-11T23:24:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/groceries-adjucator-checks-in http://www.tutor2u.net/blog/index.php/economics/comments/groceries-adjucator-checks-in#When:12:55:00Z The BBC business news site reports on the set up of a new body to police supermarket code of practice for suppliers - catchily called the Groceries Code Adjudicator that will sit within the Office of Fair Trading (OFT). For many years there has been a long running saga about the buying power (monopsony power) of the major supermarkets when purchasing from farmers. Dairy producers have complained that the supermarkets have squeezed prices to such an extent that they can no longer make money - many have left the industry. The supermarkets respond that many of the complaints come from lobby groups that have no day-to-day experience of the farming/retail relationship. They claim it is simply not in their own interest for commercial relationships with the farmers to threaten the economic viability of the farming industry. The long running row over whether supermarkets abuse their dominant relationship with some farmers and food suppliers will rumble on. Jim Paice - UK farming minister argues that “The new adjudicator will help to strike the right balance between farmers and food producers getting a fair deal, and supermarkets ensuring their customers can get the high-quality British food they want at a price they can afford.”  Critics argue that an adjucator is not needed and it will become another costly quango and a cause of government failure. AS and A2 Specifications, AQA Economics Unit 1, EdExcel Economics Unit 1, A2 Micro, AS Micro, Agriculture, Business Economics, Monopoly, Competition Policy, Government Intervention, Regulation, Market Failure, Market Equilibrium and Price, Nature of Supply, 2010-08-03T12:55:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/schumpeter-would-be-proud http://www.tutor2u.net/blog/index.php/economics/comments/schumpeter-would-be-proud#When:09:18:00Z Yesterday, it was announced that valued by market capitalisation, Apple has now surpassed Microsoft to become the biggest tech company in the world with a value of $222 bn. Schumpeter would be pleased to know his creative destruction is still in full flow!  This video would make a good starter for revising growth of firms. AS and A2 Specifications, AQA Economics Unit 3, EdExcel Economics Unit 3, A2 Micro, Business Economics, Monopoly, Oligopoly, Economic Growth, Economics of Technology, Teaching of Economics, 2010-05-28T09:18:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/a2-economics-revision-efficiency-and-price-intervention-in-markets http://www.tutor2u.net/blog/index.php/economics/comments/a2-economics-revision-efficiency-and-price-intervention-in-markets#When:19:04:00Z In 2007 the European Union Competition Commission introduced maximum prices for the roaming charges made by mobile phone service providers. These are the rates charged by one operator to another to enable its customers to make calls while visiting another country. Evaluate the view that a policy of price capping for European Union mobile phone operators will lead to an improvement in consumer and producer welfare (25 marks) AS and A2 Specifications, AQA Economics Unit 3, EdExcel Economics Unit 3, A2 Micro, Business Economics, Monopoly, Oligopoly, Price Discrimination, Competition Policy, European Economy, Single Market, Government Intervention, Government Failure, Maximum Prices, Market Equilibrium and Price, Nature of Demand, Price Mechanism in Action, 2010-05-21T19:04:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/record-fines-for-tobacco-price-fixing-as-cartel-goes-up-in-smoke http://www.tutor2u.net/blog/index.php/economics/comments/record-fines-for-tobacco-price-fixing-as-cartel-goes-up-in-smoke#When:17:09:00Z Today the Office of Fair Trading (OFT) has given out the largest ever total fine in a case under the UK Competition Act 1998. A huge fine has been imposed on two two tobacco manufacturers and ten retailers engaged in illegal price fixing for tobacco products in the UK.This is a good example of the financial risks that companies face when found guilty of anti-competitive behaviour. The tobacco manufacturers involved are Imperial Tobacco and Gallaher, and the retailers are Asda, The Co-operative Group, First Quench, Morrisons, One Stop Stores (formerly T&S Stores), Safeway, Sainsbury’s, Shell, Somerfield and TM Retail. Imperial Tobacco was fined £112m and Co-op and Asda were penalised by £14m each AS and A2 Specifications, AQA Economics Unit 1, AQA Economics Unit 3, EdExcel Economics Unit 1, EdExcel Economics Unit 3, OCR AS Economics Unit F581, A2 Micro, AS Micro, Business Economics, Monopoly, Oligopoly, Competition Policy, Government Intervention, Regulation, Market Failure, Teaching of Economics, 2010-04-16T17:09:00+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/price-discrimination-tesco-and-one-stop http://www.tutor2u.net/blog/index.php/economics/comments/price-discrimination-tesco-and-one-stop#When:15:41:00Z The Times has an article on alleged price discrimination tactics by Tesco using it’s One Stop branches. A2 Micro, AS Micro, Business Economics, Monopoly, Price Discrimination, Government Intervention, Regulation, Market Failure, Teaching of Economics, 2010-03-22T15:41:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/walmart-the-social-benefits-of-market-power http://www.tutor2u.net/blog/index.php/economics/comments/walmart-the-social-benefits-of-market-power#When:22:21:00Z A hat tip to Kevin Hinde at Durham for spotting this article in Free Exchange at the Economist “Wal-Mart clearly has market power, which it occasionally uses abusively, if not necessarily illegally. But sometimes, it uses its market power to accomplish things government entities are unwilling or unable to accomplish—pressing environmental standards on its suppliers, for instance, or reining in abusive lenders.” A good example to use when evaluating the economic and social welfare aspects of monopoly power A2 Micro, AS Micro, Business Economics, Monopoly, Market Failure, Teaching of Economics, 2010-03-21T22:21:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/carlos-slim-monopoly-and-a-licence-to-print-money http://www.tutor2u.net/blog/index.php/economics/comments/carlos-slim-monopoly-and-a-licence-to-print-money#When:18:07:00Z The latest Forbes rankings of the world’s wealthiest people is the cue for a slew of articles and short features. Rory Cellan-Jones has this BBC news video piece on the wealth attributed to Carlos Slim the Mexican telecoms monopolist who controls 90 per cent of landlines and 80 per cent of mobile connections in that country. A super piece to show to illuminate the chasm in income and wealth in Mexico. A2 Micro, AS Micro, Emerging Economies, Business Economics, Monopoly, Economic Growth, Poverty and Inequality, Teaching of Economics, 2010-03-12T18:07:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/apple-and-patent-races http://www.tutor2u.net/blog/index.php/economics/comments/apple-and-patent-races#When:23:58:00Z Here is a revealing chart showing the number of patent applications made by Apple contrasted with Google or Taiwan-based cellphone maker HTC. Between 2004 and 2007, when Apple was preparing the iPhone, it filed 507 patents, while Google filed just 67, and HTC filed none, according to the chart. Strikes me that this is a good chart to use when teaching the importance of research and patent protection as a basis for sustaining and exploiting product and process innovations. A2 Micro, AS Micro, Business Economics, Monopoly, Oligopoly, Economic Growth, Economics of Technology, Teaching of Economics, 2010-03-08T23:58:00+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/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/supermarkets-accused-of-price-gouging http://www.tutor2u.net/blog/index.php/economics/comments/supermarkets-accused-of-price-gouging#When:11:52:00Z The Guardian today carries a story about alleged price gouging by the supermarkets. Tesco and Asda refute the charge but they are said to have lifted the prices of a number of necessary purchases for many household goods in the lead up to Christmas. “Both supermarkets, according to Bridgeman, would be able to use their sales data or information from loyalty cards to identify those purchases customers feel they have to make at Christmas and then target these categories for some steep rises “to extract maximum profit” from shoppers who have neither the time nor capacity to go elsewhere. So household cleaning goods, shaving products, toiletries, lightbulbs, batteries, pickles, sauces, herbs and spices typically consumed at Christmas, favourite seasonal drinks, hangover and indigestion pills, and must-have family presents were all categories seeing dramatic hikes on some lines” Price gouging involves charging more for consumers whose demand is price insensitive, in other words the price elasticity of demand is low. This would allow the retailers to achieve a higher profit margin on their sales as they extract consumer surplus and turn it into extra producer surplus. The accusation is a strong one more so because many thousands of families on lower incomes may have suffered price hikes at a time when budgets are already under enormous pressure from the effects of the recession and rising utility and energy bills. More here: How supermarkets can cut ‘thousands of prices’ but your bills may go up A2 Micro, AS Micro, Business Economics, Monopoly, Market Equilibrium and Price, Elasticity of Demand, Nature of Demand, Teaching of Economics, 2010-02-13T11:52:00+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/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/salt-union-and-elasticity-of-supply http://www.tutor2u.net/blog/index.php/economics/comments/salt-union-and-elasticity-of-supply#When:08:03:00Z The Big Freeze has caused a huge rise in the demand for grit to treat road surfaces. Most of this demand comes from local authorities and inevitably the supply-side of the market has found it difficult to match production with demand. The Salt Union is the dominant supplier of rock salt to use on Britain’s roads. Their mine at Winsford in Cheshire is the UK’s biggest rock salt mine and is capable of extracting 30,000 tonnes per week, it has nearly 140 miles of roads some 200 metres below ground. But their plant has been working at full capacity since mid December and the Salt Union has admitted that - despite working 24 hours-a-day seven days-a-week at a maximum output of 30,000 tonnes a week, it is not possible to sustain the unprecedented level of repeat orders coming in. The potash mine at Boulby in Cleveland is the other big source of rock salt in the UK, it too is working at capacity and has opted to divert planned exports to local authorities because of unexpected depletion of stocks. The third main supplier of rock salt comes from Northern Ireland - the Irish Salt Mining and Exploration Company Stocks of rock salt have dropped sharply and the main supplier is working at capacity - two factors that have made the short run supply of rock salt highly inelastic in response to strong demand. The free market price of salt ought to rise in such circumstances and there is evidence that local councils who have flexible salt supply contracts with the Salt Union are seeing a rise in the cost of salt per tonne. This BBC magazine article tries to unearth some of the detail on salt contract prices.  AS Micro, Business Economics, Monopoly, Market Equilibrium and Price, Elasticity of Supply, Nature of Supply, 2010-01-07T08:03:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/cadburys-share-of-uk-confectionery-market-melts-away http://www.tutor2u.net/blog/index.php/economics/comments/cadburys-share-of-uk-confectionery-market-melts-away#When:17:32:00Z Embroiled in what looks likely to be a protracted takeover bid from Kraft, Cadbury’s has suffered a blow with the news that its share of the UK confectionery market has dipped below 30 per cent for the first time in a while. The Times reports that Cadbury’s chunk of the chocolate market by value slipped 1.7 per cent to 29.8 per cent last month, the first time that it has fallen below 30 per cent all year. Market share of Mars, its biggest rival, slipped 0.6 per cent in the period. There are signs that aggressive pricing of basic chocolate bars by discount retailers such as Aldi and Lidl is having an effect; so too is the growth of sales for own-brand bars offered by Tesco, Sainsbury’s and the ongoing battle for customers between Waitrose and Marks and Spencer. Some customers have complained about a 75% rise in the price of a 230g bar of Dairy Milk in the last 12 months. High world cocoa prices have explained some of the price hike but Cadbury’s tactic of launching a new 100g bar priced at £1 had led some to claim that their are deliberately trying to anchor their prices at a higher level to raise profit margins as a defence against the takeover bid. The decline in market share suggests that chocoholics are more price sensitive than Cadburys might have forecast. A2 Micro, AS Micro, Business Economics, Monopoly, 2009-12-17T17:32:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/the-steady-but-inexorable-decline-of-a-web-monopoly http://www.tutor2u.net/blog/index.php/economics/comments/the-steady-but-inexorable-decline-of-a-web-monopoly#When:23:23:00Z This new chart from Barclays Capital shows the steady but sustained decline in the global market share for the internet explorer browser. For years Microsoft has been in dispute with the European Union competition authorities over alleged abuse of its dominant position in the browser market. From now onwards, it will now offer European users a choice of web browser options like Apple’s Safari, Google’s Chrome, and Opera, in addition to its Internet Explorer (IE). Mozilla’s Firefox now has a quarter of the browser marke and Chrome has made a good start in this increasingly contestable market. Google is positioning Chrome as both a browser and an operating system - a real challenge to the Microsoft model. A2 Micro, AS Micro, Business Economics, Monopoly, Economic Growth, Economics of Technology, 2009-12-16T23:23:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/nhs-govt-failure http://www.tutor2u.net/blog/index.php/economics/comments/nhs-govt-failure#When:22:29:00Z The NHS is back at the centre of hot debate again this weekend, as the Dr Foster report findings generate differences of opinions. AS Micro, Business Economics, Economies of Scale, Monopoly, Government Intervention, Government Failure, Health Economics, Market Failure, Information Failure, Merit & De-Merit Goods, 2009-11-29T22:29:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/price-discrimination-teacher-presentation http://www.tutor2u.net/blog/index.php/economics/comments/price-discrimination-teacher-presentation#When:22:41:00Z Fancy watching the Michael Jackson film “This is It” at your local cinema? Demand is strong and box office receipts are booming. As you pay for your ticket keep in mind that your local cinema will be engaging in a number of different forms of price discrimination to convert your hard earned cash into revenue and profit. Take the admission charges for a showing this coming Tuesday - the 10th of November mid afternoon at three Vue Cinemas across the UK. For a standard adult ticket there is a £1.95 price variation for these cinemas. Doncaster (3pm) £4.75 Staines (4pm) £5.95 Greenwich O2 (4pm) £6.45 Fulham Broadway (4.30pm) £6.90 The later showing at Greenwich which restricts customers to Only 18s only will cost an adult £8.75 for a ticket. We’ve updated our revision presentation on Price Discrimination which is available below: Launch interactive revision presentation on Price Discrimination Download pdf of slide handouts AS and A2 Specifications, AQA Economics Unit 3, Economics Presentations, EdExcel Economics Unit 3, A2 Micro, AS Micro, Business Economics, Monopoly, Price Discrimination, 2009-11-08T22:41:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/great-examples-of-near-pure-monopolies http://www.tutor2u.net/blog/index.php/economics/comments/great-examples-of-near-pure-monopolies#When:13:42:00Z A big hat tip to one of my students Arno Albici for spotting a superb article in the Economist about a cluster of mid-sized Japanese manufacturers who continue to enjoy near pure-monopoly power in highly specific, high value-added businesses. decades of industry expertise and reinvesting profit to fund high levels of research and innovation continue to give these companies a remarkable competitive strength in the market. The barriers to entry for rival manufacturers are very high and this helps to explain the limited contestability in the global marketplace. For example: Shimano earns around $1.5 billion a year by supplying 60-70% of the world’s bicycle gears and brakes YKK makes around half the world’s zip fasteners by value, 75% of motors for hard-disk drives in computers come from a firm called Nidec 90% of the micro-motors used to adjust the rear-view mirror in every car are made by Mabuchi “Many technology products have become commodities, but certain components have not, since they require continual innovation. So entry barriers to the business of making them remain high, and although the margins on the final goods have deteriorated, the margins on specialised, high-end components are still juicy.: Much more here A2 Micro, Business Economics, Monopoly, Economic Growth, Economics of Technology, Manufacturing Industry, Teaching of Economics, 2009-11-07T13:42:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/ofwat-plans-to-turn-the-tap-on-water-company-prices http://www.tutor2u.net/blog/index.php/economics/comments/ofwat-plans-to-turn-the-tap-on-water-company-prices#When:07:28:01Z The Times today has an interesting article on the power battle between the water industry regulator OFWAT and the regional monopoly providers such as Thames Water. It appears that a much tougher pricing regime is planned for the utilities leading to cuts in the real price of water supplies for consumers. “Every five years, Ofwat sets limits on prices that water companies in England and Wales can charge. For 2010-15, it has proposed that, before taking inflation into account, bills should be reduced for many customers, bringing the average annual water and sewerage bill down by 4 per cent from £344 to £330 by 2015. The water companies had wanted a £28 rise to fund their business plans.” OFWAT wants the utilities to invest more in in improving drinking water quality, cutting leakage levels and raise the number of metered households from 36 per cent to 50 per cent (in a bid to control water usage). But will imposing real price cuts help achieve this objective? The aim is to have a pricing regime that forces the utilities to raise productivity and cut out as many inefficiencies as possible. Water is a good example of where a strong regulator is needed because of the absence of competition - after all consumers can’t switch supplier if they are given a poor service. A2 Micro, Business Economics, Monopoly, Government Intervention, Regulation, 2009-11-02T07:28:01+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/monopsony-power-supermarket-bullies http://www.tutor2u.net/blog/index.php/economics/comments/monopsony-power-supermarket-bullies#When:06:14:00Z Many thanks to Janis Thompson at Bristol GS for suggesting this terrific 3-minute video on the battle between supermarkets and their hard-pressed suppliers.  A great range of business and economics topics in here, including an obvious starting point for discussing the ethical issues raised in the clip Launch BBC video Download student worksheet (including video link) A2 Micro, AS Micro, Business Economics, Monopoly, Market Failure, 2009-10-22T06:14:00+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/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/economics-snapshot-google-draws-away-from-microsoft-and-yahoo http://www.tutor2u.net/blog/index.php/economics/comments/economics-snapshot-google-draws-away-from-microsoft-and-yahoo#When:22:06:01Z This BBC report discusses a deal announced between Microsoft and Yahoo. “Microsoft’s Bing search engine will power the Yahoo website and Yahoo will in turn become the advertising sales team for Microsoft’s online offering” This is an attempt to compete head on with the growing market dominance of Google in search engine queries but as the chart above shows there is a clear divergence between the market share of Google and the combined market share of Microsoft and Yahoo. Microsoft and Yahoo’s combined share of U.S. search queries was 28% in June, down from 30% a year ago, according to comScore. A2 Micro, Business Economics, Economies of Scale, Monopoly, 2009-07-29T22:06:01+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/contestable-markets-spotify-takes-on-itunes http://www.tutor2u.net/blog/index.php/economics/comments/contestable-markets-spotify-takes-on-itunes#When:11:15:00Z Here is the latest move in the battle for position, power and profitability in the market for digital downloads. Spotify the music streaming service based in Sweden has submitted an application to Apple for their iPhone that will allow their premium service users to search for music on the Spotify playlists and download their free library of songs onto their mobile phone. Spotify say that the free application for the iPhone has met all of the developer guidelines required by Apple. The application will not allow users to buy music from the iTunes online store and herein lies the stumbling block! Will Apple really allow potentially one of its major rivals in the market place to find a home on the ultra-popular iPhone? Their dominance of the mobile phone music market looks too strong and too profitable to allow this new application. Spotify has become tremendously popular within a short space of time - it is claimed that they have over two million users in the UK alone. *The advertising-funded version of Spotify is free of charge *The premium service costs Euro 9.99 a month *Apple has already approved several other music services such as Last.fm, Deezer and Pandora but these are much smaller competitors *Music technology experts say that one of the main advantages of the Spotify application for the iPhone is offline play - push a button to download your Spotify playlists containing up to 3,333 songs to the app for playing whilst not connected Here Rory Cellan-Jones from the BBC test drives the new Spotify application And this Guardian editorial sings the praises of being able to listen to music without paying over the odds Update: In August 2009 Apple announced that it had approved the bid for an iPhone app from Spotify. Details here A2 Micro, AS Micro, Business Economics, Monopoly, Economic Growth, Economics of Technology, Market Equilibrium and Price, Nature of Supply, Price Mechanism in Action, 2009-07-29T11:15:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/using-the-big-question http://www.tutor2u.net/blog/index.php/economics/comments/using-the-big-question#When:10:31:00Z The Big Question feature in the Independent is a reassuringly regular source of useful and interesting background articles. There is often an economic / environmental /social / business perspective to their choice of topics in the news. And the Indy handily provides some vivid graphics that can serve well as student handouts or a prompt for a data response question. Here is a brief selection of recent features Why is inequality rising in the UK? (July 2009) Can the G8 meet its climate change targets? (July 2009) What has gone wrong between the Chancellor and the Governor? (June 2009) Will there be cuts in public spending whichever party is in power? (June 2009) Why are games consoles the focus of the battle between computer giants? (June 2009)   Business Economics, Monopoly, Cost Benefit Analysis, Economic Growth, Economics of Technology, Environmental Economics, Government Intervention, Poverty and Inequality, Teaching of Economics, UK Economy, Fiscal Policy, Keynesian Economics, 2009-07-28T10:31:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/microsoft-to-offer-users-a-choice-of-browsers http://www.tutor2u.net/blog/index.php/economics/comments/microsoft-to-offer-users-a-choice-of-browsers#When:19:08:00Z The battle between Microsoft and the EU competition commission seems to have gone on for an age. In the latest move Microsoft has agreed to contact European users of its Windows software to a choice of Web browsers. The browsers featured in the ballot would be determined by market share; the five with the highest—at the moment, Internet Explorer, Firefox, Apple Inc.‘s Safari, Opera and Chrome—are almost certain to be displayed. What is critical is the number of web users who then decide to switch to an alternative browser and click on an option for Microsoft IE to be removed as the default web browser. My default choice is now Firefox from Mozilla. Windows 7 is due for release on the 22nd of October. A2 Micro, AS Micro, Business Economics, Monopoly, Competition Policy, Economic Growth, Economics of Technology, Government Intervention, Regulation, 2009-07-26T19:08:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/ofwat-wants-cuts-in-the-real-cost-of-water-bills http://www.tutor2u.net/blog/index.php/economics/comments/ofwat-wants-cuts-in-the-real-cost-of-water-bills#When:12:18:00Z The water regulator OFWAT has published their latest five-year price capping proposals for the UK water industry. They want household bills to fall in real terms for water customers in England and Wales - positive news for people struggling to pay their utility bills but not so for shareholders in the water companies who have become renowned for their generous dividends on the back of price increases over and above inflation in past years. A2 Micro, AS Micro, Business Economics, Monopoly, Competition Policy, Government Intervention, Maximum Prices, Regulation, 2009-07-24T12:18:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/economics-trivia-tesco-and-competition http://www.tutor2u.net/blog/index.php/economics/comments/economics-trivia-tesco-and-competition#When:13:34:00Z *Tesco has a 31 per cent share of the UK grocery market *It is the dominant supermarket in 72% of Britain’s 121 post-codes *In April 2009 Tesco reported a 10 per cent rise in underlying annual pre-tax profits to £3.13bn *Annual sales were £59bn Source: The Times (17-07-09) and the Financial Times (04-09) A2 Micro, AS Micro, Business Economics, Monopoly, Quirky Trivia, 2009-07-21T13:34:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/unintended-consequences-of-painkiller-innovation http://www.tutor2u.net/blog/index.php/economics/comments/unintended-consequences-of-painkiller-innovation#When:18:18:00Z The retail price of over-the-counter painkillers fell sharply a few years back when one of the last legal price-fixing agreements covering pharmaceutical products came to an end. Within days the cost of a packet of soluble aspirins had halved as supermarkets rushed to bring their own-label products to the market space. Cheaper pain-killers have been a benefit to millions of people who paid over the odds to chemists and Big Pharma for cold remedies and relief from the pain of toothache and other ailments. But one of the unintended consequences of tough competition in the market has been the emergence of yet more powerful tablets. How many of us when faced with an array of cold-remedies now opt by default for the ‘extra strength’ variety? The manufacturers know that putting simple phrases such as “new improved”, “maximum strength” and “fast acting, dual action” on the packets are often enough for consumers to trade up to strong pain-killing products and pay a premium price. But one of the consequences of research and development in the over-the-counter market for pain remedies has been growing evidence of consumer addiction. John Gapper writes about this in this blog. Codeine present in many products such as Nurofen Plus and Solpadeine Plus in particular is causing great concern. A House of Commons report published earlier on this year recommended that painkillers containing codeine should be sold in smaller packets and available only after consultation. A2 Micro, AS Micro, Business Economics, Monopoly, Oligopoly, Market Failure, Information Failure, Market Equilibrium and Price, Nature of Demand, 2009-07-07T18:18:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/will-o2s-network-be-able-to-carry-the-traffic http://www.tutor2u.net/blog/index.php/economics/comments/will-o2s-network-be-able-to-carry-the-traffic#When:15:25:00Z O2 has won the exclusive contract to sell the new Palm Pre in Britain and the contract means that O2 will be the only UK network selling the Palm Pre and Apple’s iPhone. These exclusive deals for O2 will consolidate its position as the dominant network service provider for smart phones. O2’s parent company Telefonica will also sell the phone exclusively in Spain, Ireland and Germany, buyers of the new phone will be tied into a two-year deal. But given the huge demand for these data hungry devices, will O2’s network capacity be sufficient to cope with the expected surge in phone demand and usage when the Palm Pre arrives in Europe this autumn? Existing iPhone users may find that network access speeds and reliability will suffer and thousands of extra users join the O2 system. More here from dot.life blog written by Rory Cellan-Jones. A2 Micro, AS Micro, Business Economics, Monopoly, Oligopoly, Economic Growth, Economics of Technology, Market Equilibrium and Price, Elasticity of Supply, Nature of Demand, 2009-07-07T15:25:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/east-coast-rail-line-is-nationalised http://www.tutor2u.net/blog/index.php/economics/comments/east-coast-rail-line-is-nationalised#When:08:17:00Z The profitable East Coast rail line north of Newcastle heading into Northumberland towards Berwick upon Tweed is one of the most glorious on the entire British rail network. There are stunning views looking out to Holy Island, Bamburgh Castle and the delightful village of Alnmouth. And as trains pull out of Durham there is a fantastic panorama featuring Durham Cathedral, a view to take the breath away whatever the weather. Even the most hardened commuter is tempted away from their laptop to soak up the view. It is unlikely that senior executives at National Express will be in the mood to savour these delights since the government is taking the East Coast rail line that runs from London to Edinburgh into public ownership.   A2 Micro, AS Micro, Business Economics, Monopoly, Competition Policy, Government Intervention, Transport Economics, Recession Watch, 2009-07-01T08:17:00+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/setanta-out-of-their-depth-in-the-premier-league http://www.tutor2u.net/blog/index.php/economics/comments/setanta-out-of-their-depth-in-the-premier-league#When:14:43:00Z James Robinson presents a prime example of government failure in this Guardian Media article. Setanta’s probable demise has been well documented throughout the press, with most pointing to their folly at attempting to compete with the mighty Sky in the upper echelons of broadcasting. However, their presence in that lofty abode only came about as a result as a result of charge against the Premier League set by the European Commission in 2001. A2 Micro, AS Micro, Business Economics, Monopoly, 2009-06-10T14:43:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/revision-market-structure-and-innovation http://www.tutor2u.net/blog/index.php/economics/comments/revision-market-structure-and-innovation#When:13:16:01Z Which market conditions are optimal for effective and sustained innovation to occur? This is a question that has vexed economists and business academics for many years. High levels of research and development spending are frequently observed in oligopolistic markets, although this does not always translate itself into a fast pace of innovation. A2 Micro, Business Economics, Monopoly, Oligopoly, 2009-05-28T13:16:01+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/revision-price-discrimination-presentation http://www.tutor2u.net/blog/index.php/economics/comments/revision-price-discrimination-presentation#When:08:20:01Z Price discrimination by businessesHere is a revision presentation on price discrimination. A2 Micro, Business Economics, Monopoly, Price Discrimination, Market Equilibrium and Price, Nature of Demand, Price Mechanism in Action, 2009-05-26T08:20:01+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/rio-tinto-and-nippon-steel-agree-big-cut-in-iron-ore-prices http://www.tutor2u.net/blog/index.php/economics/comments/rio-tinto-and-nippon-steel-agree-big-cut-in-iron-ore-prices#When:07:45:00Z Annual contract prices thrashed out between the world’s biggest iron ore producers and the giant steel companies who are the biggest users of the commodity provide a window on a bi-lateral monopoly situation which pitches a monopoly supplier with a monopsonistic buyer. The balance of negotiating power in the market sends the contracted price higher or lower demanding on changing supply and demand conditions. So the news that Rio Tinto’s subsidiary Hammersley Iron has agreed a 33 per cent cut in the annual contract price for iron ore with Japan’s Nippon Steel and with it brought an end to over five years of sustained increases in world iron ore prices is significant. A2 Micro, AS Micro, Business Economics, Monopoly, Commodities Markets, Economic Growth, Global Economy, Market Equilibrium and Price, Nature of Demand, Price Mechanism in Action, Development Economics, 2009-05-26T07:45:00+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/revision-network-economies-of-scale1 http://www.tutor2u.net/blog/index.php/economics/comments/revision-network-economies-of-scale1#When:15:49:58Z The power of networks is becoming increasingly recognised in the economics of long run costs, revenues and profits. Network economies rarely figure in mainstream AS and A2 economics textbooks but they will have to eventually as the sheer scope of network effects is understood. A2 Micro, AS Micro, Business Economics, Economies of Scale, Monopoly, Competition Policy, Market Equilibrium and Price, Nature of Supply, Teaching of Economics, 2009-05-11T15:49:58+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/pepsi-and-vertical-integration http://www.tutor2u.net/blog/index.php/economics/comments/pepsi-and-vertical-integration#When:16:39:00Z Here is a great example for the revision notes on business growth. PepsiCo which also includes the Tropicana and Gatorade brands within its business has made a $6bn cash and stock offer for the Pepsi Bottling Group and PepsiAmericas. Pepsi already owns sizeable equity stakes in both of these huge bottling businesses - but it has taken advantage of the low stock market and a handy cash mountain to make a takeover bid. It is a classic case of backward vertical integration and a report in the Financial Times says that PepsiCo expects the integration to cut costs by about $200m annually. Britvic is PepsiCo’s bottler in the UK. Keep an eye out for Britvic making a move on smaller bottling companies elsewhere in the European Union. A2 Micro, AS Micro, Business Economics, Monopoly, 2009-04-21T16:39:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/you-tubes-losses http://www.tutor2u.net/blog/index.php/economics/comments/you-tubes-losses#When:16:05:00Z Is there a better daily source of insight and cracker-jack examples to use in the classroom than the Lex column in the Financial Times? One of today’s pieces focused on Google - described as a one-trick pony - and also the loss-making You Tube. You can dominate a market and be regarded as a huge success - but make eye wateringly large losses at the same time. A2 Micro, AS Micro, Business Economics, Monopoly, GCSE Economics, Market Equilibrium and Price, Nature of Demand, 2009-04-17T16:05:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/qa-why-do-cartels-often-collapse http://www.tutor2u.net/blog/index.php/economics/comments/qa-why-do-cartels-often-collapse#When:09:36:00Z Recent business history both here in the UK and in international markets is littered with examples of cartel-behaviour by businesses that seem to have come unstuck. Just type price-fixing into Google news and see what comes up! Even on the day I am writing this blog answer, the FT reports that three cargo airlines have agreed to pay fines totalling $214m for their roles in a global conspiracy to fix prices for air freight. Bloomberg reports that a former sales executive at Hitachi Displays Ltd. has been charged with participating in a global conspiracy to fix prices for liquid crystal displays sold to Dell Inc. And in Ireland, a former director of a Dublin car company has been given a 15-month suspended prison sentence and fined €160,000 after pleading guilty to charges of price-fixing. Economics Q&A, Q&A - Market Failure, Q&A - Markets, A2 Micro, AS Micro, Business Economics, Monopoly, Oligopoly, Competition Policy, Government Intervention, Market Failure, Market Equilibrium and Price, Price Mechanism in Action, 2009-04-14T09:36:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/airports-for-sale-any-bidders http://www.tutor2u.net/blog/index.php/economics/comments/airports-for-sale-any-bidders#When:20:01:00Z The confirmation from the Competition Commission that Ferrovial will be required to sell three of their UK airports represents one of the most important competition rulings of recent years. A2 Micro, AS Micro, Business Economics, Monopoly, Competition Policy, Transport Economics, 2009-03-20T20:01:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/qa-in-what-type-of-market-does-the-ipod-operate-in http://www.tutor2u.net/blog/index.php/economics/comments/qa-in-what-type-of-market-does-the-ipod-operate-in#When:15:10:00Z Q&A: iPod and Market Structure: In what type of market does the iPod operate in? In this answer I will assume that we are discussing the market for personal digital audio and video media players. Keep in mind that music can be downloaded (legally and illegally) in numerous ways such as the iPod, smart phones and standard laptops. Economics Q&A, Q&A - Markets, A2 Micro, AS Micro, Business Economics, Monopoly, Oligopoly, GCSE Economics, Market Equilibrium and Price, Nature of Demand, 2009-02-22T15:10:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/requiem-for-drm http://www.tutor2u.net/blog/index.php/economics/comments/requiem-for-drm#When:13:25:06Z Arno Albici on the key changes at Apple.Most people who by default use iTunes are unaware that it is about to change, in a big way. At Macworld, the most important technological conference for Apple consumers (which ironically will no longer feature an appearance of Apple from now on), Phil Schiller (Apple’s vice president of product marketing) has announced that two major changes were going to be made with the most used music download program in the world. Firstly there would no longer be any DRM, and secondly there would be a new three-tier pricing system. Of course all Apple aficionados who were present at the conference rejoiced, but that is a something that can be ignored since they would have done so no matter what the Apple representative on stage would have said (yes, they’re that devout to the company…). A2 Micro, AS Micro, Business Economics, Monopoly, Price Discrimination, Market Equilibrium and Price, Price Mechanism in Action, 2009-01-12T13:25:06+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/barriers-to-entry http://www.tutor2u.net/blog/index.php/economics/comments/barriers-to-entry#When:22:17:00Z In business there are often important barriers to entry which act to limit the ability of businesses to break into new markets. The Bottom Line on Radio 4 this week considered the existence of these barriers. Leading the discussion was Will King, the founder and CEO of KMI King of Shaves, the innovative UK-based personal grooming business that has successfully broken into the shaving product markets and whose new four bladed razor is now number three in handle sales to Gillette. King mentioned that there were over 20,000 patents in the razor and personal grooming industry including mechanical hinges on the construction of razors which requires new entrants to design their way around the patents. The panelists on the programme discussed a number of other entry barriers - among them:   1. Intellectual patents and ownership of technology - but patents are needed to provide an incentive to invest   2. Expertise and reputation of the incumbent - intangibles   3. Licences are important such as professional qualifications   4. Inherent suspicion among consumers about new ideas - behavioural economics tells us that many people are quite happy with their default choices - it may take a while for any change in preferences to occur.   5. Regulations and legislation involving employing people - a major barrier for fast-growing smaller businesses many of whom are highly innovative The Bottom Line is always worth a listen - the podcast is available for free from iTunes. And this weeks programme also considered which kinds of sectors will weather the storm and do well in a recession? The different nature of a recession this time around may well give us a clue to the likely winners from the downturn especially with credit so hard to find. It was thought that successful businesses during the current downturn would tend to be:   1. Agile and entrepreneurial, customer centric   2. Businesses with low debts and those who are cash rich - cash flow management is becoming critical - cash flow forecasts will come under increasing scrutiny.   3. High energy businesses that swim against the tide   4. Knowledge building companies The Bottom Line A2 Micro, AS Micro, Business Economics, Monopoly, GCSE Economics, Market Equilibrium and Price, Nature of Supply, 2008-11-17T22:17:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/airline-mergers-and-competition-policy http://www.tutor2u.net/blog/index.php/economics/comments/airline-mergers-and-competition-policy#When:20:16:01Z Today we heard of another instance of consolidation in the European Union aviation industry. Lufthansa has agreed with Michael Bishop, founder of BMI to up their stake in the UK airline from 30 per cent to 80 per cent by buying out Sir Michael’s own equity stake in the business. Having acquired Swiss Airlines a while back Lufthansa continues to build a broader base for its operations, and in buying BMI it gains a well established mainly short-haul operator which has a significant number of scarce and hugely valuable landing slots from Heathrow. Lufthansa will emerge as the second-biggest carrier behind British Airways at Heathrow. Virgin has 3 percent of slots at Heathrow, the main airport for London; bmi has 12 percent and British Airways more than 40 percent. These land slots represent an important barrier to entry for airlines wanting the green light to expand their operations at chosen airports. Just as a few weeks back, when the government nudged Lloyds TSB into mating with embattled bank HBoS, at times of great economic and financial uncertainty, many mergers and takeovers are born of necessity rather than excessive optimism. And this creates a possible headache for the Competition Policy authorities who must make a judgement about whether to allow the integration to proceed without intervention or insist that the newly enlarged business divests some of their operations to ensure that the markets remain competitive. When the survival of a business is at stake and with it thousands of jobs, are the competition authorities more inclined to turn a blind eye? The answer is probably YES and there will be many more mergers in the airline industry before the current economic crisis is over. A2 Micro, Business Economics, Monopoly, Competition Policy, GCSE Economics, Transport Economics, 2008-10-29T20:16:01+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/baa-faces-break-up-after-competition-probe http://www.tutor2u.net/blog/index.php/economics/comments/baa-faces-break-up-after-competition-probe#When:16:28:00Z Michael O’Leary, CEO of Ryanair has called it the ‘best decision in the history of aviation ever.’ Colin Matthews, Chief Executive of BAA has slammed it as ‘flawed’. The Competition Commission has delivered a report which suggests that BAA should see three of its UK airports including two in London and one at either Edinburgh or Glasgow. A2 Micro, AS Micro, Business Economics, Monopoly, Government Intervention, Transport Economics, 2008-08-21T16:28:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/get-me-to-pay-day-ok-but-it-will-cost-you-1500 http://www.tutor2u.net/blog/index.php/economics/comments/get-me-to-pay-day-ok-but-it-will-cost-you-1500#When:10:55:00Z Quick cash, cash rush, same-day-money, get me to pay-day, pay-day express - the brand names of the pay-day loan market which claims to provide an essential service for cash-strapped people who need an injection of liquidity to cover unforessen spending and avoid high charges on unauthorised overdrafts. Whatever the social value of providing such cash funds to those in desperation the rates of interest charged on the loans are incendiary to say the least and it is little wonder that the Office of Fair Trading is expected to investigate this segment of the home finance industry. A2 Micro, AS Micro, Business Economics, Monopoly, Government Intervention, Market Failure, Information Failure, 2008-07-28T10:55:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/a2-economics-revision-the-great-energy-rip-off http://www.tutor2u.net/blog/index.php/economics/comments/a2-economics-revision-the-great-energy-rip-off#When:15:08:01Z Times article from last week gives plenty of scope for applying and revising key terms from concentrated markets. Are power companies ripping off UK consumers? Writing in last week’s Times on May 21st, Robin Pagnamenta explores whether there is evidence that UK energy companies are engaged in tacit collusion. A2 Micro, AS Micro, Business Economics, Monopoly, 2008-05-26T15:08:01+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/yes-sir-yes-sir-20000-bags-full http://www.tutor2u.net/blog/index.php/economics/comments/yes-sir-yes-sir-20000-bags-full#When:23:42:00Z They’d be in Milan too. Following on from the Terminal 5 fiasco, the Competition Commission has been triggered to publish a damning “emerging thinking” report on the (in)competence of BAA’s airport monopoly. It criticises them for “failing airlines and customers” and may eventually lead to the forced sale of several airports. Business Economics, Monopoly, Competition Policy, Transport Economics, 2008-04-22T23:42:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/revision-natural-monopolies http://www.tutor2u.net/blog/index.php/economics/comments/revision-natural-monopolies#When:20:37:00Z This revision note is aimed at A2 economics students and those studying for the International Bacc. It looks at the idea of a natural monopoly and considers examples of industries with characteristics of natural monpoly in Britain and how competition policy has sought to oversee efficiency and welfare for producers and consumers. Revision note: Revision_Natural_Monopoly.pdf AS Micro, Business Economics, Monopoly, 2008-04-17T20:37:00+00:00 http://www.tutor2u.net/blog/index.php/economics/comments/learning-lessons-from-cento-veljanovski http://www.tutor2u.net/blog/index.php/economics/comments/learning-lessons-from-cento-veljanovski#When:11:58:00Z On Wednesday, Cento Veljanovski spoke at the Institute of Economic Affairs on the topic of “Catching Cartels”. Dr. Veljanovski is the Managing Director of Case Associates and an IEA Fellow in Law & Economics. He has been selected as one of the “most highly regarded” competition economists globally and one of the top five in Europe by the 2006 Global Competition Review survey. A2 Micro, Business Economics, Monopoly, Competition Policy, 2008-03-09T11:58:00+00:00