This definition of rationality is significantly different to the standard economic idea as it does not mean to maximize the personal benefit regardless of the consequences. Economist Lászlo Zsolnai (1997) even highlights that due to the rareness of the character traits of empathy and social commitment decision-makers who have these qualities receive prizes and ethical awards. He also accentuates that in complex decisions multiple considerations including a variety of value dimensions are required to develop the optimal outcome. This explains the buying behaviour of consumers who consume mindful and are aware of that there consuming decision also influences other
However, a failure of the market can occur when the price system fails to take into account all of the costs and benefits involved, leading to an inefficient allocation of scarce resources in the free market. Externalities are often regarded as a source of market failure because the occurrence of externality leads the market to produce too much, over production, or too little of a good or service, under production. The externality can be divided into two types: positive externality and negative externality. While the negative externality is a cost caused by that market activity, the positive externality is a benefit that occurs as a consequence of the market activity, resulting in beneficial impact on bystander not involved in the production or consumption of a good. Both externality can be commonly found in everyday life.
For example Acemoglu and Rob-inson, who write that “Institutions are the fundamental cause of economic growth and development differences across countries”, or Bogart. The lat-ter’s main focus is on the growth of a country’s economy brought about by institutional change in the long run. Institutional change is another fun-damental issue: it is about the introduction of new institutions which re-place old ones, and it can be due to many factors (such as government de-crees, or market-led processes). According to North, bad institutions are eventually replaced by good institutions, however there is evidence of the persistence of bad institutions in many different countries. As Persson (2010) says: “a common mistake made by economists and historians alike is to ascribe efficiency characteristics to institutions because they are pervasive and long-lived”.
INTRODUCTION “The moment you make a mistake in pricing, you 're eating into your reputation or your profits.” - Katharine Paine The above quote from the founder of KDPaine & Partners LLC and The Delahaye Group is quite apt. Pricing is quite often ignored by executives & leads to people not understanding how it can change the competitive game in an industry. Most executives believe pricing to be a zero-sum game, i.e. price increase shall lower volume of sales thus in turn hurting the margin gain, but the other way round need not necessarily be true. This problem arises owing to the setting of prices based on cost-plus basis rather than a customer value point of view basis.
In the absence of substitutes, the producer of such a product will wield substantial market power. Such exercise of market power can lead to allocative inefficiencies. Tension can arise between IPRs and competition law because IPRs create market power, even monopolies, depending upon the extent of availability of substitute products. IPRs tend to restrict competition, while competition law engenders
The first states that small businesses are the backbone of the American economy because they strengthen communal unity and the second states they are not because they do not promote virtue or economic growth. Nevertheless, the benefits from each argument are not mutually exclusive. Aristotle would likely conclude that small businesses are an important part of the American economy – but not the backbone. When considering the golden mean, an excessive focus on small businesses leads to a lack of growth and virtue in the economy whereas disregarding small businesses altogether would mean risking weakening communal ties and how invested the American people feel in the
Retail customers do not necessarily have the same characteristics as customers of service or production organisations. However, the ICI survey still points to a fundamental weakness with customer complaint processes, which rely on information collected. The third weakness of customer complaint processes is that the information they provide is often too sketchy to yield an accurate picture of the problem. This situation can result in an organisation wasting valuable resources chasing after symptoms rather than solving root causes. The weaknesses associated with after the fact processes do not mean that organisations should stop collecting customer feedback.
One is that information technology can be easily copied, which, in the absence of protection, discourages any incentive to invest in innovation. The second is that the market should be the main mechanism for the exchange of technological information between companies. There are authors who argue that, within the modern systems of intellectual property protection, the significance of the two assumptions is overrated. In most cases copying of the technological information is neither easy nor cheap, so unauthorized copying cannot be simply accomplished and does not represent an attractive option. On the other hand, the costs of appropriation and transfer of technological information through the market are not always the lowest.
The product of a firm is close, but not perfect substitute of other firm. Buyers are therefore willing to pay different prices from the same product that is produced by different firms, giving the individual to influence the market price of its product. 3. Selling costs: Under monopolistic competition, products are differentiated and these differences are made known to the buyers through selling costs. Due to this reason, selling costs constitute a integral part of the total cost under monopolistic
A market structure will affect the barrier to entry for the companies that intend to join that market. A monopoly markets structure has the biggest level of barriers to entry while the perfectly competitive market has zero percent level of barriers to entry. The other factors that influence the firm behaviour under a market structure are the efficiency. Firm will be more efficient in a competitive market while firms will be least efficient in a monopoly