Horizontal integration occurs when there is a merger between two firms in the same industry operating at the same stage of production. For example, if two newspapers like the Independent and the Guardian merged, this would be a horizontal integration. Horizontal integration is different to vertical integration which occurs when firms at different stages of …
Readers Question: Why invest capita in purely competitive industries with equilibrium margins that are razor thin and entrants that erode quasi profits? Suppose volume is not exceptionally large, why then? Economic theory suggests that firms will invest in industries where there is supernormal profit being made. Investment will be more attractive in industries where there …
On campaign in the early 1800s, Napoleon approached a hostelry on the slopes of Col du Pin Bouchain near Roanne. (BTW: the Col du Pin Bouchain at 759m was the first mountain ever used in the Tour de France in the 1903 edition.) Napoleon was shocked at the price of eggs, and so he asked …
Several readers questions on the economy, such as different types of economic systems and the role of money and the economy. Jarrow crusade in the 1930s – resulting from a failure of the economic system and mass unemployment. 1. What is an economic system? An economic system is the general way that an economy …
Back in the summer of 2010, Apple launched the iPad. It was launched to great excitement and it seems the initial euphoria was well placed. From sales of zero at the start of 2010, the tablet market has expanded to over 100 million units a year as we come towards the end of 2013. Sales …
Following on from a recent post about companies who avoid paying tax. It’s interesting to try and understand why some companies have been much more vulnerable to protest about the issue – but some companies seem almost insulated from protest. For examples, Starbucks has been hit by high profile boycott. Protesters from UK Uncut have …
A merger will lead to a bigger firm and a greater market concentration. This can have both advantages and disadvantages for the public interest. A merger is likely to reduce competition and give the new firm more market power. Therefore, it will be able to increase prices leading to a decline in consumer surplus and …
A merger occurs when two firms join together to form one bigger company. Therefore, the new company will have an increased market share. However, this higher market share will have significant problems. The competition commission will be especially concerned because the new firm is likely to have more than 25% of the market share, which …