Amazon is NOT a Monopoly

Amazon has achieved a level of dominance like a monopoly, however, it is not a monopoly. Amazon has a lot of power and they could use that power to hurt America’s economy. In 2013 domestic e-commerce sales added up to 263 billion dollars. To prove Amazon is acting illegally one would have to prove that Amazon is raising prices and curtailing on supply. In 2013, Amazon has 274 million in net income from 74.5 billion in sales (profit margin of .37%). Former columnist Matthew Yglesias characterizes Amazon as a charitable institution that benefits consumers. Amazon is not just a retailer it lets third-party companies sell on its website. The third parties companies profit all combined it ends up being more profitable than Amazon alone.

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Biggest Diamonds Cartel: On The Verge Of Falling Apart

http://www.economist.com/node/2921462
This article discusses several reasons that lead to the potential break down of the De Beers cartel. For decades, De Beers has been a preeminent cartel in diamonds. The group owes its market power to its control of a stockpile of the world’s rough diamond supply. However, like every other cartel, De Beers faces a risk of losing its power, in particular, the challenge of new entrants in the diamonds market. In Russia, Australia and Canada, big miners started to get hold of a large supply of their own stones. The Lev Leviev Group, De Beers’ biggest competitor at the moment, is threatening to take over the group’s predominant position. From controlling 80% of the world’s rough stones in the mid nineteenth century, De Beer’s share now drops to 45%.

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Iron Ore Rout Deepens as Rising Supply, Weaker Demand Feed Glut

Iron Ore prices are at their lowest price since 2009 because of oversupply and a faltering demand. The biggest iron mining firms stepped up their production in anticipation for a large of demand of steel in China. However, China’s demand for iron is lower than what the firms anticipated. This excess supply of iron has driven the prices of the iron to a new low price. The price has fallen to $43.89 a dry metric ton, the lowest it has been in 6 years.

http://www.bloomberg.com/news/articles/2015-11-25/iron-ore-rout-deepens-as-rising-supply-weaker-demand-feed-glut

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Why Gas Prices are so Low

One main reason for the price of gasoline being so low is there is now an increased supply in the market. New drilling techniques have allowed for oil to be drilled from the floor of the Gulf of Mexico. This along with increased domestic production since 2008 have led to an overflow of oil into the U.S. Market. This overwhelming supply has driven down the price of oil leading to us paying less at the pump.

http://www.bankrate.com/finance/economics/reasons-gasoline-prices-drop-2.aspx

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Supply and demand in the copper industry

As a result of the slower economic growth in China, the world’s greatest buyer of commodities, demand for copper has decreased. This has not yet affected supply, as the copper supply from mines is set to hit a record high. This is fueling concerns that supply has outpaced demand. However, this week, a major copper producer cut supply by 350 million pounds, leading to a slight increase in prices.

http://www.wsj.com/articles/copper-edges-lower-1449749306

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Competitive Market of Fake Christmas Trees

For my blog post I looked at the different varieties of fake christmas trees a family could purchase for Christmas this year. One of the first links that popped up was “Top 10 Best Artificial Christmas Tree in 2015 Reviews.” To me, this seemed like a good example of a competitive market because there are a variety of different sellers and obviously a wide variety of people who choose to celebrate Christmas. But why all the hassle and clean-up of a real tree? Around the holiday season there is obviously a higher demand of christmas trees on the market, so more sellers will come on to the market. But the artificial christmas tree market does not have much of a long term gain for sellers. Since an artificial tree can be stored away for the rest of the year, buyers won’t have to come back each and every year.  According to the National Christmas Tree Association, sales of real christmas trees were at 32 million in 2000 and 23.4 million in 2003. On average, fake trees last for about six years until most families decide to purchase another, so there is a constant flow in and out of the market for fake and real Christmas Trees.

 

http://www.topportalreview.com/top-10-best-artificial-christmas-tree-2015-reviews/

http://www.hintsandthings.com/spareroom/artificialtrees.htm

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The happiest place on earth made even happier– for Florida residents

This article discusses Disney World’s use of price discrimination to attract customers that are less likely customers to come (and spend money) at the amusement park. Disney’s team realized that Floridians are less excited by a day at the park than your average American family, mostly because there is a higher chance they have already had the Disney experience. Because of sunken and fixed costs, the article explains, it is more profitable for Disney to provide state residents, who have the ability to attend more often, a discount rather than maintain the same price for all attendees. This increases their chance of going, and because it is “above the marginal cost of each guest’s attendance,” then it still more profitable for Disney to maximize their profits through price discrimination.

 

http://www.overtcollusion.com/pricing/2013/2/14/disneys-brilliant-usage-of-price-discrimination.html

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Wal-Mart Monopoly

Wal-Mart is one of the biggest firms in the world, and it acts like a monopoly in several ways. First, it is able to determine its price. It does not have to take the market price in all cases. It often will lower its prices to drive other firms out of business. Once these places go out of business, it can then set whatever price it chooses for its goods.

Another thing that Wal-Mart does is it will make one model of a good (such as a refrigerator) very cheap, so that it draws customers in. Once the customer sees that the good is quite inexpensive, they assume that the other models of the good are also cheaper than they can find elsewhere. These other models may, in fact, be more expensive than at other businesses.

Wal-Mart is also able to endure a downturn in one good very easily because it sells so many other goods. If cheese prices go up, it won’t affect Wal-Mart very much because it can still sell other food items, clothing, and appliances.

https://dominic92.wordpress.com/2010/02/10/wal-mart-and-its-oligopolistic-market-structure/

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Education: A Bad Public Good?

http://www.independent.org/publications/tir/article.asp?a=804

 

This Article attacks an interesting topic. It attempts to prove that Education could be a malignant public good. It is hard to imagine that education could have any negative effects on society, yet this author provides a compelling argument. He argues that the definition of a public good from an economic standpoint is that it is undersupplied. Yet, government is always trying to expand education. This results in government trying to create a false equilibrium that is nearly impossible to reach.

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the tragedy of the commons in fishing

The following article talks about the tragedy of the commons in fishing in the ocean. There is being fished to much, a lot of fish stock are being over-exploited. It explains this problem further, and provides ideas for how this problem should be handled. The author gives as solutions, for example, implementing more marine reserves and having global register of fishing vessels.

This article goes well together with chapter 18 and the experiment about the tragedy of the commons we did in class, since it discusses a lot about the tragedy of commons in fishing.

http://www.economist.com/news/leaders/21596942-new-management-needed-planets-most-important-common-resource-tragedy-high

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