The Theory of the Contestable Market - 2230 Words

The theory of contestable markets, along with the static and dynamic views of competition, are used as theories to analyse how markets perform. The static view focuses on the structure of the market as the determining factor of competition, with the dynamic view focusing on dynamic aspects such as technology and entrepreneurship. The contestable markets theory has a different focus, focusing on the importance of barriers to entry and exit. Nonetheless it does incorporate features from both views. More importantly it shifts the focus and provides new insight into the workings of competition. The two differing views of competition will be examined, followed by an examination of the contestable market theory, concluding with an analysis of†¦show more content†¦This view portrays competition as a process of change and evolution rather than a static state in which equilibrium will be reached. Hayek, a main architect of this approach, defines competition as a dynamic behavioural a ctivity. Central to this activity is knowledge, how it is acquired and communicated through the economy. He criticises the neoclassical assumption of perfect knowledge, with the view that costs are not a given, and so not exogenous. Competition is a process of interaction with the environment, in which innovation, such as new methods of production and new products, are a response to the unique situation of the economy. It results in the optimal use of resources. (Auerbach 1988) Alchian believes that there is a natural selection process which results in a competitive outcome. Such competition depends not only on the physical possibilities but also the abilities and attitudes of participants, the entrepreneurs and consumers. It therefore argues for property rights, as to increase the level of competition, forcing companies to undergo research and development and to innovate, in order to survive. For competition to be improved and sustained there needs to be a genuine desire on behalf of entrepreneurs to engage in competitive behaviour, to innovate and to invent to drive markets forward and create what Schumpeter famously called the â€Å"gales of creative destruction†. (Vickers, 1995, pp15). In the classic dynamic view, it arguesShow MoreRelated Airline Industry and Contestability Project What is a contestable market?1639 Words   |  7 PagesAirline Industry and Contestability Project What is a contestable market? In a contestable market, there are one or a number of firms which profit maximise. In other words the number of firms is irrelevant. The key assumption to make here is that barriers to entry to the industry are relatively low, as is the cost to exit the industry. The existence of potential entrants into the industry will tend to keep profits to their normal level even in the short run, because existing firms will wantRead More Bus Transport Essay827 Words   |  4 PagesBus Transport A) The nature of the competition in the bus transport market is very specific. The article suggests competition is used to keep out new entrants to the market thus maintaining market share for the larger firms, active competition takes place between small operators or between a large and a small operator. Further evidence suggests the competition was not of substantial benefit to the consumer and only used to get one over on the firms rivals, more services run on routesRead MoreThe Oligopoly Theory2874 Words   |  12 PagesRunning head: Oligopoly Theory The Oligopoly Theory OPERATIONS MANAGEMENT Table of Contents Abstract†¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦3 Introduction†¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦.4 Oligopolistic Competition†¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦...5 Characteristics of an Oligopoly†¦..†¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦.†¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦....6 Models of Oligopoly Behavior†¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦9 Conclusion†¦.†¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦..†¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦...11 References†¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Read MorePossibility Of Becoming Monopolized Market1007 Words   |  5 Pagesof Becoming Monopolized Market Referring to the textbook, the definition of monopoly is a market structure where a single firm serves as an entire market for a good that has no close substitutes. It acts as the crucial threat to innovation and low prices. Due to the fact, the dominance of single-firm with more than half of its market share is almost as harmful to consumer as a monopoly. Back in 1970s, the entrance of WorldCom, Inc. and Sprint into telecommunication market had effect on increasingRead MorePrice Makers and Price Takers952 Words   |  4 PagesMarket Structure o Perfect (pure) competition Price–taking firms each with no influence over the ruling market price (see diagram below) Free entry and exist of businesses in the long run – drives down profits towards a normal profit equilibrium level Each supplier produces homogeneous products – each a perfect substitute – hence the perfectly elastic demand curve for the individual supplier Key factor - interdependent nature of pricing decisions between rival firms Each firm must considerRead MoreTaking a Look at Vertex901 Words   |  4 Pagessuction effect – the dominant firm lowers the average price of its products and captures contestable sales which the firm was unable to capture before. Vertex offered two largest distributors in the market rolled-back target rebates. Under this scheme, rebates were applied to the total turnover previously realized over a certain period. The court has been harsh in treating rebates without fully considering the theory of harm of rebates (Michelin II). Although the Commission issued a new guidance tacklingRead MoreMarketing Analysis : Perfect Competition2982 Words   |  12 PagesIntroduction Markets do not have control of how their products are sold to consumers who strive to purchase merchandise. Every market has its own particular regulations relating to how buyers purchase items and how sellers sell them. This concept aids businesses in regulating how they function and how they must operate in future. I will provide an adequate amount of information concerning perfect competition, monopolistic competition, oligopoly, and monopoly. I will also discuss how each term isRead MorePharmaceutical Industry Pricing Models Essay3586 Words   |  15 Pagesinvestments fail to produce a marketable drug, and of those drugs that do make it to market, few are commercially successful. A higher than average rate of return may represent the premium needed to attract each marginal investment into an industry with such high risk. As noted previously, the study of pharmaceutical prices is made more complicated by the absence of a uniform price across buyers and geographic areas. The mark et for pharmaceuticals is highly segmented, both domestically and internationallyRead MoreThe Case of Romanian Cigarette Market10250 Words   |  41 PagesCHAPTER VIII. STUDY-CASES 1. THE CASE OF ROMANIAN CIGARETTE MARKET 1. Introduction Among the obligations assumed by Romania by(1) the EU Adhesion Treaty (2)there is the fact that, until 2010, the minimum tax level for cigarettes must be aligned with the minimum tax level of the member states – 57% of the most popular cigarettes’ (MPPC) price, but not less than 64 Euros for 1000 cigarettes. Through the modifications made to the Fiscal Code in April 2006 by the OU 33/2006 the government approvedRead MoreGlobalization and Human Resources2045 Words   |  9 Pagesways: The first impact of globalization is it will increase the opportunities to reap scale and scope economies. The development of exploitation economies is heavily influenced by technological progress. Economies will only materialize in markets where the demand fits well with either type of economies (Baumol, Panzar, and Willig, 1982). The second impact of globalization is it will increase the love for variety and taste convergence, implying larger peaks and expanded peripheries. The

The College Problem Solution Essay Topics Cover Up

The College Problem Solution Essay Topics Cover Up Depending on what sort of school you're likely to, is dependent on what sort of issues you're going to face. Colleges are interested in finding a feeling of maturity and introspectionpinpoint the transformation and demonstrate your private growth. College Problem Solution Essay Topics Features The problem solution essay is similar to any other that you've written it has different sections. Once you have discussed the very first portion of the essay, which is in fact the issue, move on to its second part solution. If you realize that there is some type of a problem explained in the job, and you're requested to give possible way outs, then you need to repeat the issue and solution definitions. The issue and solution essay writing procedure can be created easy when you've got a plan in mind. It's still true that you wonder how someone can help students. While each person problems are unique to their existing conditions, I un derstand there are some difficulties that just about all college students deal with at least one time during their time at school. During the duration of your academic career, whether at school or university, you'll probably have to write a minumum of one problem solution essay. A problem solution essay seems to be something which not only college students may get assigned. Don't go from the goals you've set in your essay writing so you're able to attain the desired effects that you wanted. The hardest task is to locate a great topic for your essay. Hence, you've been provided with the simplest topic for problem solution essays, you can choose any on of the above mentioned and get started writing your essay very quickly. You can open a chain reaction by means of your essay. The issue and solution essay examples on the page will steer you on the very best approach that you ought to take for writing your paper. Issue arrangement essay is a form of an exploration paper in which you portray a particular issue and endeavor to discover a way of comprehending it. Topic selection is very important whenever writing a problem-reducing essay. When you're assigned to compose a problem-solution essay or research paper, selecting a fantastic topic is the initial dilemma you have to work out. The last area of the problem solution essay is a reminder of the introduction and the logical end of the argument presented in the primary body. Your task is to locate the most significant ones and then to produce some problem-solution. If you own a topic provided already, click the order now button to file your request. To start with, it's that type of writing which revolves around one specific theme that is either a local or maybe a worldwide issue. Top College Problem Solution Essay Topics Secrets The web increases the range of happy long-distance relationships. There are several problem solution essay topics on the Internet that you just don't understand what to select. Moving forward in little ways can help you feel empowered and in control. Thus, the target of a problem-reducing essay isn't to get the best solution for a specific problem, but instead to get the best solution. Among the excellent things about problem solution essays is they have a fairly clear structure. The main reason is there are basically only two important things you should write about in your problem and solution essay, making it so much simpler to research info and structure the paper. All About College Problem Solution Essay Topics If you don't have a thing to write about in regards to your essay it's an issue. If you are searching for ideas for your problem solution essay topic, then you've come to the correct place. These days, there are lots of issues to chat about. As an example, telling readers they're to blame if they do nothing to address the issue is a sure-fire means to lose readers. Facts, Fiction and College Problem Solution Essay Topics It is extremel y easy to acquire an entire group of such topics if you simply look around. It's very similar to other types of essays in a challenge to pick an acceptable topic. There are additionally some descriptions so you might find the fullest picture of what a terrific topic ought to be. Whenever you have so many topics to speak about, choose what you're passionate about and it is going to be super-easy that you develop a considerable argument for it. While picking a topic for your essay be sure you are passionate about it and don't get lost among lots of information that can be found. As with other essays, people frequently discover that it's tricky to choose a topic particularly when the instructor asks students to produce their own topics. All you will need is a simple topic.

Fund Flow Analysis Free Essays

Every business concern, at the end of its financial period, prepares Income Statements and Balance Sheet. Income Statements show the net result, Net Profit, of the business operations and contains various expenses incurred and losses and revenue earned during that period. Balance Sheet gives a summary of assets and liabilities as on a particular date and shows the financial position of the business. We will write a custom essay sample on Fund Flow Analysis or any similar topic only for you Order Now The liabilities side of a balance sheet shows the sources from where funds are raised and the assets side shows how the funds raised are utilized. But it does not show the causes or reasons for changes in assets and liabilities, flow of funds, between two balance sheet dates. Therefore, a statement is prepared in addition to the Income Statements and Balance Sheet, to show changes in assets and liabilities between two balance sheet dates, which is known as Fund Flow Statement. It is a statement, also known as Statement of Changes in Financial Position, designed to analyse the changes in financial condition of a concern between to specified dates. The Term â€Å"Fund† The term â€Å"Fund† can be explained in many ways. In the narrow sense, it means cash only. Transactions involving cash receipts and payments are considered in this approach. In the broader sense, fund means working capital, which is the excess of current assets over current liabilities. For fund flow analysis, the broader approach, working capital approach, is considered. The word â€Å"Flow† means change and â€Å"fund flow† means change in funds or change in working capital. Any increase or decrease in working capital is flow of funds. Flow of funds may be either inflow of funds or outflow of funds. Inflow refers to sources of funds and outflow refers to applications of funds. If a transaction brings any change in working capital, flow of funds takes place. This will happen when changes occurs in the values of fixed assets, share capital, long term debts etc. with the corresponding changes in the values of current assets or current liabilities. Many transactions which take place in a business enterprise may increase or decrease its working capital or even may not affect any change in it. Following are some examples: Purchase of fixed assets: When an asset is purchased, cash is going out there by reducing the cash balance. The effect of this transaction is that working capital decreases and this change (decrease) in working capital is called as application of funds. Here the accounts involved are Current Assets (Cash) and Fixed Assets. Issue of share capital: This transaction will increase the working capital as cash balance increases. This change (increase) in working capital is called as source of funds. Here the two accounts involved are current assets (Cash) and Shareholders’ Funds (Share Capital). Sale of Fixed Assets: The transaction will have the effect of increasing the working capital as the cash balance increases thereby increasing working capital. It is a source of funds. Here the accounts involved are current assets (Cash) and Fixed Assets. Redemption of debentures: This transaction has the effect of reducing the working capital, as it results in reduction in cash balance. It is an application of funds. The two accounts affected by this transaction are Current Assets (Cash) and Long-Term Liability (Debenture). Purchase of inventory: This transaction results in decrease in cash and increase in stock thereby keeping the total current assets at the same figure. Hence there will be no change in the Working Capital. In this case both the accounts involved are Current Assets (Cash and Stock). Accepting Bills Payable issued by creditors: The effect of this transaction on Working Capital is Nil as it results in increase in bills payable (a current liability) and decreases the creditors (another current liability). Since there is no change in total current liabilities there is no flow of funds. The accounts involved as current liabilities. Fixed Assets purchased and payment is made by issuing shares: This transaction will not have any impact on working capital as it does not result in any change either in the current asset or in the current liability. Hence there is no flow of funds. The two accounts affected are Fixed Assets and Shareholders’ Funds (Capital a/c). From the above examples, it is clear that there will be flow of funds when the transaction involves: a) Current assets and fixed assets b) Current assets and capital c) Current assets and long term liabilities d) Current liabilities and long term liabilities e) Current liabilities and fixed assets. How to cite Fund Flow Analysis, Essay examples