Telecommunications moves closer to Duopoly

Bad news might be on the horizon for wireless phone customers. In a bold move, major wireless carrier AT&T has made a proposal to acquire T-Mobile. Both companies are major players in the telecommunications market and a proposed merger will create major implications for the market and customers alike. Along with Verizon, AT&T is one of the two largest telecommunications companies on the market right now, and the acquisition of T-Mobile will only increase it's already considerable influence over the market. When the Bell company, the last company to hold a monopoly on the telecommunications market fell apart, the industry turned into in a state of near perfect competition, allowing for better prices for costumers as the many telecommunications firms fought for more influence. Since then, mergers and acquisitions have led to many companies being absorbed into one another, most notably in the past few years the merger of AT&T and Cingular. The current market is in a state of Oligopoly, with the major providers of wireless telephone service in the United States being Verizon, AT&T, T-Mobile and Sprint. The decrease in competition in the telecommunications industry has led to increases in prices over the years with only marginal increases in quality. Phones today require expensive data plans and have many underlying charges while the quality of the product depends mostly on personal preference and the region you live in. The proposed $39 Billion dollar acquisition of T-Mobile goes through, the wireless industry will likely turn into a 2 horse race between AT&T and Verizon. There are likely to be few challengers capable of keeping up with the two new powerhouses of the industry, as both Verizon and AT&T have very sought after phones on their rosters. Both carry the ever popular iPhone and an array of smart phones that continue to gain in popularity as new technology becomes available. The merger also puts pressure on Verizon and slightly less powerful Sprint to snap up smaller companies as a bid to keep up with AT&T. The lack of quality in other carriers such as Boost Mobile or Cricket wireless, who typically provide pay-as-you-go plans, are unlikely to attract customers away from the major companies regardless of price increases. A new wireless market composed of two giants is likely to lead to more headaches for wireless costumers as less competition and limited regulation in the industry will likely lead to even higher prices for what many now consider to be an essential technology in their life.

http://www.fool.com/investing/fiercemarkets/2011/03/23/atts-proposed-t-mobile-acquisition-going-from-mono.aspx
http://blogs.seattleweekly.com/dailyweekly/2011/03/att_to_eat_t-mobile_in_39b_mon.php
http://articles.latimes.com/2011/mar/21/business/la-fi-att-tmobile-20110321

With Oil Prices Increasing, is it Time to Switch to Natual Gas?

With oil prices increasing at an exponential due to increasing, there is a decreasing oil supply and reserve leading to increased prices. With the region in affect, New England, there has been a close to equal price between both products. Since the late half of the decade, there has been a decrease in households that heat with oil to a change to houses now being heated with natural gas. The difficulty in this is the cost that it takes to convert from an oil heating system to a natural gas system, a cost between $4,000 and $6,000 dollars (Freeman). Oil prices have risen from $62 dollars a barrel to $103 dollars a barrel in he pasty year. This increase has the affect of saving more than $1500 dollars in the winter months, if using natural gas. The oil supply is increasing prices rapidly becasue of the decreased supply and increased demand. The law of supply and demand states that prices go down then quantity consumed increases, but this is not the case. Prices are increasing but the quantity consumed is continuing to increase because of relied need for oil. With natural gas, the increasing price of oil is showing a market shift to natural gas. The price of natural gas is decreasing because of a newly found supply of natural gas. The United states consumes around 20 trillion cubic feet a year, but the new supply found is over 500 trillion cubic feet, a surplus of natural gas available for consumption. This increase in supply is showing a direct effect with the need for natural gas in the heating industry, more people are switching from oil to natural gas becasue of the decrease in prices of heating. With the saving switched from oil to natural gas, switching a heating system would be possible with the money saved from not using oil. With domestic oil monopolies of the past being dissovled so that there is the potential for competition with prices, the prouction cost for producing oil has increased because of the demand. This demand increase has regionally standardized prices for demand but not between the middle eastern oil barons. The monopolies in the oil producing countries has resulted in a constant imported oil price at $103 per barrel, but because demand is on a regional basis, the price may vary state to state. The strength of the middle eastern oil barons, individuals who have greater power in an are, and their influence on price flux makes oil prices sucesstible for drastic change and increase. A domestice reserve of natural gas allows for individual price variation beacuse of the absence of monopolies, individuals that determines who is allowed to access that good. This absence of monopolies will allow for lower prices in the natural gas market and a lower total cost for heating of homes. This allows for more perfect competition, a result in having smaller firms, allowing for more consumer choice between homes, rather than relying on the oil barons to determine production cost for oil companies. http://www.masslive.com/news/index.ssf/2011/03/with_oil_prices_spiking_is_is.html

Rising Beer Prices Hint at Oligopoly

In this New York Times article the beer companies Anheuser-Busch InBev NV, SAB Miller, and Molson Coors are accused of rising prices for competition purposes and are being labeled oligopolies. The definition of an oligopoly is a situation of imperfect competition is which an industry is dominated by a small number of suppliers. These suppliers are all raising their beer prices together at the same time and control about eighty percent of the beer market. This has occurred before, but since the United States is in recession, there are problems that are starting to arise. The simple up rise of price on a six-pack of beer is stirring up issues within the beer markets. Throughout the years the number of beer suppliers have decreased due to the rivalry between these three brands.

Since President Barrack Obama has been appointed, his administration has been out to break up these beer monopolies along with other monopolies, such as those with food, gas and electronics. In the past there has been cases brought to the Supreme Court that deal with such antitrust issues. The Sherman Antitrust Act was passed in 1980 in order to regulate fair competition between markets. It eliminates the possibility of monopolies taking over. These three beer companies are so big, and just keep on growing which makes it almost impossible to stop or control. To them, some fines are just little bumps in the road and do not really make that big of a difference to their company. In the past companies such as Pabst has been ruled as anticompetitive and having to change different strategies and other brewers, such as Blatz, that they had acquired.

These three beer companies are so strong and have so many well-known names with in them. It would seem almost impossible for any other companies to come anywhere in reach. They are an imperfect competition and have had great success with their advertising and competitive pricing, these companies are going nowhere fast.

http://www.nytimes.com/2009/08/27/business/27views.html?_r=1&ref=anheuserbuschinbevnv

Has Apple Finally Become a Monopoly Like Microsoft?

In this article written by James R. Stoup, he addresses the question if the company Apple has finally become a monopoly just like the company Microsoft. Microsoft has been known as being a monopoly for completely taking over their market for their product. Microsoft broke the law by using their monopoly “to ensure their position in the market, force smaller companies out of business or otherwise stifle competition” (Stoup). So is Apple a monopoly with their products like iPods, iPads, Mac laptops, iPhones, and the digital music world of itunes?

A monopoly is defined as a single seller with complete control over an industry. Stoup decided in his article that Microsoft was a monopoly for their complete control and running their competition to the ground. The question is if Apple is doing the same thing. Apple is a company that focuses on digital music. Apple uses iTunes to make much of their profits. The company gets 30 plus percent of every transaction on iTunes. With that, the selling of iPods helps Apple become a monopoly.

Apple not only is controlling the digital music industry with almost no competition but they are also into the computer and laptop business with the “Macs.” Macs are laptops and computers that are competing with companies like Dell and HP are doing very well. Apple does not completely control the industry of computers though. Unlike the digital music with very few competitors, which would be considered an “oligopoly” the Macs have quite the competition.

Unlike Microsoft’s monopoly, Apple is not doing anything illegal. They are not going out of their way to put other companies down. There are no competitors in the digital music industry that can keep up with Apple. Why is Apple so good? They are constantly improving their products and maintaining low prices. So is Apple becoming an actual monopoly? According to Stoup, yes the company is starting to take control of their market. There is no one that can even come close to competing with Apple with their digital technology. Apple will not last in the long run without any competitors. Competition is always needed to constantly be improving. In their case, they will need competition to keep improving their products or they will get lazy in the long run. Just like Microsoft, Apple is becoming one of the big bad monopolies for their business practices and the quality of their product except Apple is not engaging in unlawful tactics.

http://www.applematters.com/article/has_apple_finally_become_a_monopoly_like_microsoft/

Economics Cartoon

Beyond the jokes about the down economy and an irritated country, this cartoon helps show the laws of supply and demand and smart investing. As the demand for for pitchforks goes up, the supply will drop and the price will rise. As pitchforks make more money, smart investors will try to stay ahead of the curve but investing in pitchfork companies before they make larger profits, therefore making more money themselves.

The Economy Effecting Education

President Obama claimed that “if we want more good news on the jobs front then we’ve got to make more investments in education.” While this is a previously known fact of life, a day later The New York Times released an article in which it was declared that software has become the predominate tool in legal research where as it had previously been done by collections of skilled wokers. Using such software provides a cheaper and more effective method of legal research. Due to this, the demand for technology over highly educated and skilled workers has increased. It is not only replacing more humble jobs but due to this it has created a greater demand for skill. This has led to the conclusion that only high-wage and low-wage positions have increased but those in the middle, the ones which support a middle class, have lagged. This has caused a call to fix the American education system and the inequalities that are faced within that. It was previously thought that with a good college degree, you would be successful in finding a good job. This no longer holds true and only continues to become a more invalid statement throughout the passing decades. But as this process occurs, one must wonder how this and the economic divides have effected the college process for students.  

After a survey was administered in which 21,000 high school students participated, it was shown that the economy and the current recession has been effecting students college decisions more so than it had in the past. It was released that sixty-eight percent of the applicants claimed that the economy has proved to be a crucial factor in their college decisions. This percentage has increased by four percent each year since 2009, which was described as the height of the economic recession. Through this, it was deducted that total cost of a specific college or university effected the students decision to apply or enroll by a staggering eighty-seven percent. 

            Through this, it can be determined that the demand for highly skilled workers is beginning to decline but yet there is a constant supply of educated graduates coming out of college to fulfill a decreasing number, or quantity, of jobs within the market. Due to the increase in the both the supply and demand of technology, there has been a furthering in the gap between the rich and the poor. There has been a sharp decline in the presence of the middle class and the number of jobs to support such a class. According to such articles, there needs to be a transformation within the American education system but I believe that this is an outdated theory.  If so, it can be interpreted that the undergraduate and graduate educations will only become more expensive and thus more families will suffer from this and will only further the divide which has become the original problem. I instead believe that there has to be an increase in the number of employment opportunities instead considering that there will always be a constant supply of people who are in need of jobs and without that and their entrance into the workforce, the overall economy will eventually suffer as well. I believe that there has to be an increase in the demand to meet the constant supply to at least aid the problem of the class and economic divide within society. 

http://www.nytimes.com/2011/03/07/opinion/07krugman.html?ref=unitedstateseconomy

http://thechoice.blogs.nytimes.com/2011/03/23/economy-2/?scp=2&sq=economy&st=cse

Roanoke College Economics: Roanoke College Economics Professor Wins the 2011 ...

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