Dependency theory is based around the occurrence of wealthier states benefitting economically from poorer states. Dependency theory argues against the notion that non-developed nations are created and evolve in the same way as developed nations, when in reality, they all have a different history, culture and way of growing. It brings forth the notion that there is a common course for development, and that the developing nations will just follow this path. Dependency theory highlights how economic development, although it might involve develop and non-developed nations, does not mean that economic prosperity is inevitable. Dependency theory highlights that poorer nations are able to be taken advantage of, for they have the natural resources, and large populations which are used for cheap labor, but lack the ability to establish systems that benefit economic prosperity.
The Trans Mountain pipeline has characteristics or properties of Natural Monopoly, so it falls into the products of natural monopoly. When there is an economic of scale, that is, average cost decreases as quantity increases, the natual monopoly occurs. As a result, one firm is able to supply total amount of the products at a lower cost in the market than two or more firms. If the govenment does not regulate the Natural Monopoly, it may not benefit the social welfare and the optimal outcomes. In other words, they will produce much less and charge a higher price than social optiaml lead to a high price,low average costs and high profits.
Hence, when it announces the acquisition, firm value may drop simply because investors conclude that the market is no longer growing. The acquisition in this case does not destroy value; it just signals the stagnant state of the market. Why do sellers earn higher return? Buying firms are typically larger than selling firms. In many mergers there are so much larger that even substantial net benefits would not show up clearly in the buyer’s share price.
The classic example of a technical internal economy of scale is Henry Ford's assembly line. Another type occurs when firms purchase in bulk and receive discounts for their large purchases, or a lower cost per unit of input. Cuts in administrative costs can cause marginal productivity to decline, resultingin economies of scale. Internal economies of scale tend to offer greater competitive advantages than external economies of scale. This is because an external economy of scale tends to be shared among competitor firms.
Boosting the economy, not only benefits a person, but it benefits the whole society. Advertising provides valuable information about products or events in an efficient and cost-effective manner. Not only does it provide valuable information in a cost-effective manner it also creates competition between companies. The article “Pros & Cons of Market” states, “Consumers promotes their interests by looking for the lowest prices and best quality” (Metcalf). The competition between businesses will ensure better quality of their goods and service they provide.
A differentiation advantage could be gained through well-researched and developed products being produced, or even through low prices being offered. A differentiation strategy is sometimes seen as having a bigger advantage compared to that of a company who implements a cost leadership strategy, as the customer is being offered a product which is unavailable elsewhere, giving the consumer a motive to buy. Also as the product is differentiated, the company is able to charge higher prices, as they do not have competitors competing with similar products (Johnson et al.
When some, but not all, of the necessary conditions for market formation exist. This means that markets form, but will fail to develop and supply sufficient quantities of a good or service. In the case of merit goods, such as education, markets are inefficient because they under-supply these goods, and fail to meet society’s demand. When free markets over-supply a good or service, either because producers fail to take into account the full costs of
Relating and supporting industries, if suppliers or related industries exist in the home countries that are themselves internationally competitive, this can result in competitive advantage in the new industry, firm strategy, structure, and rivalry. Different nations are characterized by different management ideologies, which can either help or hurt them in building competitive advantage. If there is a strong domestic rivalry, it helps to create improved efficiency, making those firms better international competitors. Porter also notes that chance (such as new breakthrough innovations) and government policies (such as regulation, investments in education, etc.) can influence
For example, non for profit firms can be expected to meet the increased demand more slowly or to make use their inputs less efficiently than the for profit firms. However, it is reasonable that the discipline of the market is in a lot of situations, to an certain point, weak so that the efficiency losses to be expected from for-profit producers can be considerably larger than those to be expected from non for profit producers. It has frequently been argued, however, that government and nonprofit organizations lack the incentive to be efficient (a consequence of nondistribution and soft-budget constraints), and so they may fail to set optimal incentives for managers (Alchian and Demsetz, 1972). The profit motive encourages efficient production. The non for profit enterprises can be a reasonable response to some kind of "market failure," specifically the inability to protect producers by ordinary contractual devices, which is a "contract failure."
Along these lines, unemployment may decrease, as this has different favorable circumstances, for example, lower government using on profits and less social issues. However, this phenomenon includes a number of different expenses. Firstly, if economic growth is unsustainable and is higher than the long run pattern rate, inflations are liable to be seen. An increase in economic growth could prompt an equalization of issued installments. In case the expanded customer expenditure causes further development, there will be an increase in the import sector.