Archive forcompetitive market

Demand for Cable TV in Constant Decrease

Cutting the Cord – The Economist

Since 2013, traditional (200 channel bundles) cable subscriptions, along with “television viewership,” are decreasing progressively. In fact, people are switching to online streaming services such as Netflix and Hulu.

This showcases some important economical concepts. Namely, the demand for cable TV is decreasing because the price of its substitutes (Video streaming services, skinny bundles… ) is much cheaper and more available in recent years than it has ever been.

Further, this shift from cable TV to streaming services showcases the effects of a downward pressure on the price of television. Indeed, the large bundles of channels creates a surplus in the quantity of channels supplied (viewers watch on average 17 channels while the bundle offers 200 channels), therefore, viewers switch to on-demand services and skinny bundles for cheaper prices and less “wasted” content.

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Oil Prices: What’s Behind the Drop?

Since the 1990’s, the oil industry has been experiencing a series of boom and busts. However, recently, the oil industry is at an all-time low. Rising oil producers such as, Nigeria, Algeria, Russia, and Canada, have contributed immensely to the drop in oil prices. Since there are more producers of oil that are competing in the same market, producers are forced to lower their prices in order to sell their oil to consumers. The diversification of the market is actually  hindering producers in the oil industry rather than allowing them to succeed in a global market. Although producers are feeling the ramifications due to the increased number of producers, consumers are benefiting from the sharp drop in oil prices.

According to the article, the drop in oil prices is “helping lower-income groups, because fuel costs eat up a larger share of their more limited earnings”. Since oil has become more affordable, the demand for oil has increased. Although the demand of oil has increased,  producers are still forced to retain low prices due to growing number of producers entering the market. This discrepancy has caused a shock to ripple throughout the international oil industry. As a result of this “In the United States, there are now virtually no wells that are profitable to drill.” Due to this shock, oil companies have announced cuts to their pay roll and have even laid off thousands of employees. Overall this sudden change in the oil markets has lead to both benefits and repercussions in the international market.

 

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National Milk Producers Federation (NMPF) Lawsuit

Recently, the Legal Reader published an article describing the settlement from a class action lawsuit against the National Milk Producers Federation. From 2003 to 2010, the NMPF was purposefully creating a shortage in cows so dairy companies could charge more for their products. This was done through paying off farmers to cease their production of milk and/or send their herds off to premature slaughter. Roughly 609 millions pounds of milk was withheld from the market during this time, costing the livelihoods of thousands of farmers and the extended lifespan of thousands of cows. The industry was led to do this to obtain higher profit margins. Recent trends have shown their revenue declining, as many health professionals are beginning to question the true benefits of dairy and encourage plant-based milks as a more viable option. For their actions of intentionally creating an economic shortage against consumers and farmers within the affected 16 states and territories, the NMPF now owes a claim.

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