To Bail or Not to Bail...

[iKotomi]

How many does it take? McDonald's deliberately went this route even though the idea of cornering the hamburger market's absurd.

McDonald's introduced a system of getting people hamburgers faster and cheaper than anybody else, and had a business model that was better than anything else out there. Given that, they just produced to the point that maximized profits, and that was too much for other restaurants to compete with. Though this can hardly be seen as a bad thing, unless you were a competitor, or you just hate Mcdonalds.

Even then, McDonald's can't act as a monopolist, though they have a huge command over the market. If they increase the prices a non-trivial amount, people would just buy hamburgers elsewhere. The competition is better described as "monopolistic competition" because of McDonald's ability to differentiate their product as different from every other hamburger.

Firms will always try to become monopolies if possible, that's a given. Only with a monopoly can you achieve economic profit in the long run. But as long as the market has open entry, most firms can not actually exercise the monopolist's privileges (price setting), and would have to settle for product differentiation at best.

Microsoft has attempted the same thing, but the success of that is more due to the ignorance of the consumer. If the consumer is unable to recognize substitutes, then the model fails. This is sort of related to the reason why most monopolies in existence are the first firms to enter the market. Consumers tend to rely on their trust for brand name rather than actually investigate the alternatives that may be cheaper.

 

[D_Matt_Ma]

Before we start debating what can get us out of recession, we should focus on what got us INTO the great depression. To this day, I think it was the Smoot Holey (I know I butchered the name, oh well) where protectionism lead to a pullback on all capital markets. I do think the New Deal prolonged the depression, but I also feel that it was the former that lead us into depression in the first place. That is why I don't think the ridiculous 1trillion dollar plan is going to destroy America.

And yes, the fact so many want a bail out is disappointing. America, land of the wimps... so sad...

Anyone seeing Obama's performances as he stops by for town halls to pitch the "stimulus?" I hear some townhalls were filled with Obamamaniacs, while others were filled with people that didn't want to talk.

And let's not get into patent theory here. That has nothing to do with bail outs at all.

And if you study the history of Mcdonalds, they actually are successful because of their ability to adapt, not their ability to do one thing well. It started with a simplified drive through simple menu. It then evolved into variety to meet people's needs (fish fillet, chick nuggets, happy meals). It then evolved into meeting healthier needs (introduction of salad and apple substitutes). It now goes into snack/coffee to capture the budget snacker. There is nothing one-shot about Mcdonalds. They're good because they're good at whatever they want to be good at.

 

[Tanegashima]

My favorite economists take. I willl let him speak for himself. I will just say he has an article called The New Kleptocracy.

http://www.michael-hudson.com/

 

[Marginal]

Anyone seeing Obama's performances as he stops by for town halls to pitch the "stimulus?" I hear some townhalls were filled with Obamamaniacs, while others were filled with people that didn't want to talk.

That way, he knows who to arrest.

 

[Archangel]

The town halls are filled with whoever comes. It's refreshing to see an American president meeting with people who haven't signed a loyalty oath.

What a piece of bullshit that was.