Critique of "The 'Best Buy' is somewhere else?"

I thought that this was a very good original blog post, but some of the explanations, to me, could have a been somewhat more in depth in economical terms. One of the downsides to Best Buy, is that it's not a producer of goods, but rather a retailer of goods. This means if the supply from one of Best Buy's manufacturers, such as Apple, is low, then both companies get hurt. Best Buy doesn't turn a profit, and Apple doesn't make money either. The down fall for companies to sell through retailers and not a company store, is that the retailer charges a higher price because if they did not, then Best Buy and other retailers would not make a profit. For Apple, or other manufacturers' stores, the parent company supports the store because of fast availability of product and no need to pay a retailer for selling the good. This is the more expensive method, but the most cost effective. Best Buy prices are higher because they wouldn't make any profit if they weren't charging higher costs. According to game theory, then if one firm charges a higher price and the others are charging a lower cost, then the higher priced firm will suffer because of lesser profits. I think the point that made, "Do you really need 36,000 sq. feet to show that a tablet, smart phone and TV all work together? You don't." was very interesting in the fact that there is a lot of unused space in Best Buy stores and with other stores, there is less floor space, less employees and more products closer together, maximizing efficiency, reducing total cost and maximizing profit. I think that it would be interesting to put Circuit City and Best Buy next to each other and compare the trend of Best Buy to the former Circuit City. Potentially by seeing what had happened to Circuit City, Best Buy could right their wrongs before it is too late to become, yet again, an industry leader. I thought that this blog post was very insightful to see how prices that are higher than equilibrium can affect a firm. This makes me realize how useful game theories are as well. By charging lower prices than competitors, than you see the benefit when your competitors charge higher prices. I also thought that in the blog, more numbers could have been used to show how drastic the effects on the company actually are, instead of having to find them from the original website. Finally, overall, I thought it was a well structured blog and economically correct but I would have like to have seen more proof of how downhill the company is going in the post, maybe a comaprison of online to in-store retailers and potentially more terms in economics describing the situation.

Critique of Effect of File Sharing

The most recent encounter with the illegal downloading community was the federal court case in New York against LimeWire, a popular peer-to-peer file sharing website. The statement was “LimeWire has cost the music industry hundreds of millions of dollars in revenue.” Although this is the opinion of many within the music industry, Harvard Business School professor Felix Oberholzer-Gee and co-author Koleman Strumpf had contradicting findings. It was believed by researchers the majority of those who download over peer-to-peer networks are teens and college kids that do not have a major contribution to record sales, “money- poor but time-rich” is how the article put it. So even if the songs were not downloaded by file sharing within this particular group, the songs probably would not be purchased. Instead of file sharing being considered a substitute in the music industry, it could be considered a compliment. This is because research states the people who actually buy CD albums “sample” music from file sharing networks and become encourage to actually purchase the music. The radio is also considered a compliment because it provides a free sample for the consumer, but differs for the producer. Another positive attribute of peer-to-peer services is free advertising, while radio stations may charge high fees which decrease competition by pricing competitors out of the market file sharing networks eliminate the barrier and increase competition.
In the previous blog titled Effect of File Sharing on Record Sales a major point is brought up as to why record sales have seem to decrease in the music industry. Because specific songs can be purchased instead of the entire album, the overall profit of the album would be a lesser amount. A solution to this issue could be providing a cheaper total amount for the album then that of each individual song. Also, developing compliments to new technological advances instead of combatting them would benefit the music industry. The highly competitiveness within the music industry makes it necessary to develop strategies to compete with the online file sharing networks, but in agreement with the preceding blog efforts should be made to feed off these newer developments which the firm might benefit more by producing a larger profit.

critique of "effect of file sharing on record sales"

I agree that online file sharing greatly affects the music industry in regards to record sales. Why would someone pay ninety-nine cents for a song or fifteen dollars for a whole CD when they can download the same song or CD, often times with the same sound quality, off the internet for free? I can imagine that online file sharing would be detrimental to an artist’s record sales. It is interesting that professor Felix Oberholzer-Gee found that most people only download the hit song, rather than the entire album. This conclusion of Oberholzer-Gee’s makes me question whether record sales can include both the profits made from the sale of a single song, and from the sale of the entire album.

I agree with Ty that the economics of the music industry is affected by the rapid growth of technology. I think it is time, with the growing music industry and the even faster growing world of technology, to start to look at online file sharing as its own market. Each online file sharing service (itunes, rhapsody, etc.) would be considered its own firm. The competition between online file sharing services and tangible stores (best buy, Barnes and Noble, etc.) has become too weighted on the online file sharing side for this market to be considered fair competition among similar firms. I think it would be interesting to watch the effects of putting the online services into their own market, and then leaving the Best Buys and Barnes and Nobles to their own market and competition.

The data that supports the conclusion that peer-to-peer online sharing sites directly collate to the increase in the music industry’s record sales suggests that it would be in the music industry’s best interest to try and control these peer-to-peer online sites. If the music industry would be able to control these sites (somehow profiting from the activity that is already generated) then the online file sharing world would no longer be such a mystery to record sales. The music industry would then be able to create an oligopoly market. In this oligopoly the music industry would have a great hand in promoting their product (the various songs/albums) because as the Harvard research concluded, the peer-to-peer websites boosted record sales. These websites served as a “sampler” to the artists’ work.

Due to people now downloading, therefore being more interested in, only single songs rather than an entire album, maybe it would be beneficial for the music industry to expect more profits from their singles rather than the entire album. Artists used to release “single CDs” separate from their entire album, maybe a look back at this marketing strategy would be beneficial not only to the artist, but the record company as a whole as well.

NFL Lockout Critique

I choose to critique Stephanie’s article primarily because it is a topic of interest for me and I had never considered the affects an NFL lockout would have on the economy. I felt that she did a great job of explaining the current issue between owners and players and the repercussions that would be associated with a lock-out. I also thought that she did a great job of tying the article with the things we have learned in class so far. The only thing I was curious about was the paragraph about the fans tickets being inelastic. I personally think that although there would be no NFL fans would be able to substitute NFL games for something else. Whether a new football league is formed, college athletics strive, or a different sports team in each city increases popularity, I feel that the money originally spent towards the NFL would be equally spent other places. Perhaps, because viewing NFL games is a luxury, the economy may actually benefit from the absence of one major sports team. People may take the money they would spend on tickets and memorabilia and either save it or spread the money elsewhere around the city. In my opinion, the main issue with the NFL lockout would be with the decrease in jobs. The NFL players themselves would be fine because they have plenty of money to survive but unless a new league was started, the thousands of stadium workers and team employees would be at a loss. I liked how Stephanie explained that the NFL is a monopoly and that other firms and businesses would be affected by the loss of the league, I wish the article had explained that more thoroughly. I am curious of all of the people affected by a lockout, which businesses and people aside from those directly a part of the NFL would be affected the greatest. I could see how the “Sunday” businesses would be greatly affected by the loss of the NFL but I am curious what businesses would be affected that is not quite as obvious. I know that for most sports and television channels, Sundays in the fall are dominated by NFL games. Also Monday night football is one of the most watched television events in the nation and networks would have to try hard to find a replacement. Of all of the articles I have read I felt she did the best job of tying her article in with what we learned in class. I think she chose a very interesting topic and I will continue to follow it into next fall and pray that I can watch my Giants on Sundays.

Critique on "Effect of File Sharing on Record Sales"

I chose to critique this article because I download a good amount of music myself, and never really realized the effects it had on today’s economy. Ty did a very good job at introducing the subject by presenting the broad topic of technology. Then he goes on to write that technology usually leads to greater productivity, in which he transitions into his main topic of how in the case of the music industry, it may be an exception. I found Ty’s second paragraph interesting because I, like many people, assumed that the increase in internet downloading led to less people buying cds, which in turn has lead to the decrease in record sales. The way he explained the actual reasoning for the decrease in record sales was a little confusing, and needed to be reread a couple of times. But when I understood it, it all came together. In Ty’s third paragraph, he nicely incorporated the notion of fixed cost and how that usually helped the industry of music to make money. He also did a good job of explaining that because you could download songs individually on iTunes, the revenue earned from albums has decreased. File sharing has made it so easy to break up albums, which would usually bring in large amounts of revenue as a whole. This was one thing that I found interesting about this article, I never really thought of how the money lost would add up to a significant amount of loss, revenue-wise. Ty ends his entry by presenting an alternative solution which could help bring revenues up by offering to put sales on a bundle of songs if you were to buy a good amount of the hit songs. He is trying to say that people want incentive to buy the whole cd. He makes a good example of how artists give away new releases to promote concerts. Ty writes that in order to help out sale records, industries need to find compliments for their record sales instead of substitutes. I feel like here he could have elaborated more on an economic level then he did. He could have also provided the reader with the compliment he wished to see happen and maybe an example of a substitute, as to show why the substitute was not a good alternative. All in all is was a very good article to choose because it was very relatable, and because this it did relate back to a current economic issue.

Telecommunications moves closer to Duopoly: Critique

Most mobile phone users are anxious about how the T-mobile/AT&T merger will play out. Many customers fear the lost of competition in the market will drive up prices. There are a number of sources that confirm this point of view. These sources also claim the price of wireless service has fallen during the last decade, but the ARPU (average revenue per user) is increasing. In essence, telecommunication firms are earning more due to the increased popularity of smartphones and it is likely phone service will cost more in the future.
However, there may be some positive outcomes from this merger. This critique explores possible benefits that could come out of an imperfect wireless market. Our textbook tells us imperfect competition is bad for the average consumer because firms can charge high prices and produce low outputs. Imperfect competition also prevents firms from entering the market. Thus, consumers are forced to buy from a select group of competing firms. After the merger, two large firms (AT&T and Verizon) will have almost complete control over the market. Those without a wireless provider will lose out because they will have to pay more for a new contract. On the other hand, both AT&T and T-mobile customers may see improved quality as a result of the merger. For example, if you are an AT&T costumer who lives in New York City, you will experience better service once the two firms merge. Lately, AT&T has struggled to keep up with the high demand in urban areas. Once the merger is finalized, AT&T users will be able to access T-mobile’s brand new backhaul network. This means faster internet connections and fewer dropped calls for both AT&T and T-mobile customers. Yes, the price of wireless service will go up, but the quality will improve as well.
Secondly, sources indicate that AT&T and Verizon will take part in a duopoly price game after the merger. In other words, both firms will constantly find ways to undercut each other. Our textbook (Economics19e) describes this phenomenon in detail on page 196. In a duopoly price game, each firm must decide weather to charge the normal price or lower price below marginal costs. A lower price will decrease a firm’s profits, but it will also work to throw the competing firm into bankruptcy. It is unlikely AT&T or Verizon will go bankrupt from a duopoly price war any time soon. Still, the merger is not entirely a bad thing. Some AT&T customers would prefer to pay more for better service.
Sources:
Samuelson, Paul A. & Nordhaus, William. 2010. Economics19e. The McGraw-Hill Companies: New York, NY

http://news.cnet.com/8301-30686_3-20046112-266.html

Sean Walsh - Critique

Critique of “The Supply & Demand of Gas” I thought that the beginning of Melissa’s analysis in the first two paragraphs was spot on. She began by introducing the topic to the audience and explaining the background information they would need initially to fully grasp the concept as it continued throughout the breakdown. She jumps right into explanation in the second paragraph by starting with specifically what recently has affected the market and in what ways. By bringing in statistics on the rise and fall of prices and market average, she paints a clearer picture for her audience and makes her explanation as visual as possible with careful word choice and easy to understand step by step progress. The second part of her second paragraph I thought was the best of the whole analysis. Especially for students of the class, her connection to the specific topics we go over in class that are at the crux of our course learning. The explanation of not only supply and demand in the context of what we learned in class, but also supply and demand in the article’s sense and the ways in which in correlates directly to the material we learn out of the text book were precisely what the guidelines for the submission indicated to include. The third and largest paragraph of the submission followed suit after the second in its precise and crisp analysis of the article. By combining the explanation on a national and more public level the crises of the natural disasters and turmoil that have been occurring recently with the more in depth analysis on terms of the material relevant to our class specifically, Melissa made an thick article on rising gas prices into a simple explanation of the facts that could be easily understood by anyone with any common sense about the concepts of supply and demand. The only small problem, and small in an almost insignificant sense was the closing. I thought the article choice as well as the whole explanation was so good and easy to read, I just thought that it deserved the proper analytical summary that left the readers with the whole sense of the depiction and not just the most recent words or the words that stuck out the most to them. The closing was fine and worked because the explanation was so good, but in my opinion I would have personally just liked that had the whole commentary topped off with the main points and the final sentences that leave the readers with the true sense of what the author was trying to say.