Nov
17
2006
Coming out the microecon class, just had a thought about monopoly:
1. Can we predict when monoply is going to happen?
2. What is the life cycle of monopoly?
My guess is monopoly will happen given the following:
1. The condition of monopoly only exist in long term;
2. There is a large gap between supply and demand;
3. There is a significant barrier to entry (measured in fixed cost over capital cost–including socio-political)
What I learned from microecon is the uncommon phenomenon of declining variable cost over time (e.g. volumn advantage over supplier) It is a misnomer to think barrier to entry as only the setup/fixed/sank cost. In fact, BoE should also include past capital accumulation reflected in declining variable cost. For example, retail should have relatively low barrier to entry in terms of fixed cost. But how many can compete against Wal-Mart now? Wal-Mart’s past capital accumulation has helped it to achieve certain level of pricing power over its suppliers. This pricing power is the real BoE in retail.
Nov
17
2006
Just read an article about “HOA Rule Forbids Couple To Smoke In Their Own Home”
I am interested in this story because I wrote a paper on state, public and private sphere. My point is: in the West, traditionally, each is respected for its own “sovereignty”. But in China, state dominates the other two.
Of course, nothing is absolute. In the U.S., there is plenty of evidence of state interfering in private life (eminent domain came to mind, marriage laws, etc.) The story cited above is an example of public (or community) rule interferes with private functions. But the setting–a condo–makes it even more interesting: the close proximity gives communal authority so much legitimacy all of a sudden.
Similar smoking bans have been tried in Pennsylvania (no smoking in car while minors are present), Maryland (Montgomery county ordinance regarding townhomes). HOA has long been pain in the ass (a while ago, a NYT/WP article talked about HOA fined a home owner because he didn’t place his trash bins in the backyard). Now when those two issues come together, in a condo setting, something interesting gotta happen.
Both sides appealed to the state and the state ruled in community’s favor. Fun, fun, fun!