EconAir

    INTRODUCTION This is not a military history of the American Civil War. Instead, it tries to answer three related questions: Was the war inevitable in 1861? Could it have been avoided? What were the alternatives to war?  BACKGROUND America has a peculiar political structure. Major decisions such as abortion, gun laws and legalizing drugs are often made by states, not the national government. The Constitution does not say anything about whether slavery should be abolished or remain legal. So slavery would be legal and protected in the major cotton-producing states. Congress could pass a law outlawing slavery but it couldn’t be enforced in the slave states. In 1861, southern cotton production was important to the northern economy. Cotton textile production was the largest industry in the north. New York City handled most of the distribution of the cotton crop and much of the financing of exports to Europe. Cotton was also by far America’s largest export. (For more on the economic inte

      Competition: Two Meanings to the Idea of Competition This tutorial discusses the supply side of a market. It introduces the specialized meaning of the concept of competition used in economics.   The word “competition” is used in two ways.  One way is the common usage - the strategies or processes companies use to compete with each other.  But economists use the word in another way - to describe the structure of an industry or market. Economists divide industries or markets into two groups - perfect competition and (not surprisingly) imperfect competition.  Imperfect competition is then subdivided into three types.  They are called monopoly, monopolistic competition, and oligopoly. Oligopoly is a market structure where a small number of companies account for a large percent of total sales. It is the dominant market structure for many large markets. A later tutorial will discuss a special version of oligopoly called bilateral oligopoly. Competitors’ Business Strategies:  Eliminatin

Introduction:  From Perfect Competition to Imperfect Competition This post is about one form of imperfect competition, oligopoly. Oligopoly is a market structure where a small number of large companies account for a large percent of industry sales. A later post describes a special type of oligopoly called bilateral oligopoly. It seems that running or owning a business in a perfectly-competitive industry is not much fun. Managers and owners have virtually no control over their business, the risk of failure is high, and profit margins are minimal. What could a manager do to have more control, reduce risk and increase profits? The basic idea is to pursue strategies that change competition from accepting and reacting to changes in the industry price to include other, controllable factors. Some of them are listed in Competition, Perfect and Imperfect. Another set of strategies is to grow the company through innovation – developing or adopting new technology, new products and production proc