Thursday, November 17, 2016

Hey from John Wilkes booth school of biz wiz comes this hypothesis

"My hypothesis is that markups have increased 
( see prior posts )
because firms became better at creating product differentiation and erecting barriers to entry."

Blaine Michael porter !

"  In 1980 Michael Porter wroteCompetitive Strategy, the ninth most influential book of the 20th century according to the Academy of Management. In this book, Porter explained how firms can create barriers to entry and obstacles to competition to increase their pricing power. The book became the primary textbook of all of the strategy courses taught in business schools and the gospel of the leading consulting firms. It captured also Warren Buffet’s investment rule. As he famously stated: “In business, I look for economic castles protected by unbreachable ‘moats’.” 

"Should we then be surprised if firms finally learned how to apply it? "

" If this were the case, Barkai’s model clearly shows that the outcome is inefficient: economic output and welfare could be greater if there were more competition. "

" But how to promote it? The traditional antitrust method, 
which looks predominantly at mergers and market shares, could be insufficient. 
If Barkai’s conclusions prove to be robust, we may need to start thinking about ..."

"   new policies to promote competition.   "

Yes deeper into interventionism more socialization of the market system 

Even some of "the Boothers " know this now !