Oligopoly is a market structure in which a few firms dominate the industry; it is an industry with a five firm concentration ratio of greater than 50%. In Oligopoly, firms are interdependent; this means their decisions (price and output) depend upon how the other firms behave: Barriers to entry are likely to be a feature …
Port Meadow in Oxford The tragedy of the commons is a situation where there is overconsumption of a particular product/service because rational individual decisions lead to an outcome that is damaging to the overall social welfare. The tragedy of the commons theory assumes that when making decisions, people take the course of action that maximises …
Readers Question: Why do monopolies occur in industries with substantial economies of scale? Question: As a result of large-scale production, the long-run average cost of production falls. This means that a monopoly can emerge in time naturally because of the relationship between average cost and the scale of an operation (Why? I don’t understand) The …
Readers question: Is there anything in economic theory that addresses what I would like to call “economic abuse” Where the profit of a what a worker does is ten to a hundred times what the worker earns to the Owner or Individual paying the worker. The worker earns $10 a day doing labour that the …
Readers Question: Is it better to sell more services/products with less profit, than sell less with high profits? What are the pros and cons to the employer, worker, and customer? i.e. high revenue low profit, vs low revenue high profit? Classical economic theory suggests firms will seek to maximise profits. The benefits of maximising profit …
At different times there have been campaigns to ‘Buy British’ – patriotic efforts to support the economy. The campaigns seem quite popular, but usually fade out, having made little difference to major macro-economic variables. It is a form of economic nationalism and similar campaigns can be seen in many different countries. Buy British campaigns can …
Recently, Liverpool supporters protested about plans to increase the price of many ticket (the most expensive seat in the Main Stand will now be £77). Many supporters complain that football tickets have risen well above the rate of inflation in recent years, making football less accessible to supporters on lower-incomes. But, what are the economic …