Essay: To what extent is transport a contestable Market? A contestable market is a market where there is freedom of entry and exit. This implies there are low (or zero) sunk costs in the industry. A sunk cost is a cost which cannot be recovered on leaving the market (e.g. spending on advertising). Therefore, the …
How do problems in the Eurozone economy and a weak Euro affect the UK? A weaker Euro would help European goods and European travel appear more attractive. It would be good news for British holiday makers not wanting to risk transatlantic flight with the Icelandic volcano still smoldering. It would not be good news for …
If you are studying for exams, you will hopefully, be learning that the value of a currency is generally influenced by factors such as: Interest rates – low interest rates lead to hot money flows out of economy and a weaker exchange rate. Relative inflation rates – Higher inflation makes a countries exports uncompetitive and …
I was looking at the scale of previous recessions. The current recession, which technically ended last quarter with a 0.1% rise in GDP, is the second worst on record. I was surprised to find that in the Great Depression, UK GDP only fell 10%. However, it is somewhat misleading. The UK economy struggled in the …
Recently, for the first time, Amazon sold as many books as Waterstones. Amazon has been operating for the past 13 years and has succeeded in becoming the countries biggest seller of books. The Managing Director of Waterstones has responded with vigour arguing that Waterstones offers much more than their online rival. He says that those …
T-Mobile and Orange mobile phones have stated that they intend to merge to form a new mobile phone company. The merging of brands will take over 18 months as they decide which brand to promote. Currently, the market share of the four leading mobile phone providers is O2 27% Vodafone 25% Orange 22% T-Mobile 15% …
A key element of UK competition policy is that any merger which leads to the creation of a firm with more than 25% of market share will automatically get referred to the competition commission. The competition commission will then evaluate whether the merger is in the public interest. However, the due to exceptional circumstances, the …
Readers Questions: do you agree with bank bailouts why? or why not? I wrote here: Why we need to bailout the banks The Great Depression was so severe because of the scale of banks who went bankrupt. Banks may not deserve to be bailed out, but, it was a necessity. However, bailing out banks has …