1. Shapiro andVarian differentiate between competition for the market andcompetition in the market. Please discuss how this premise applies tofirms’ decision to approach a new technology in a nascent market.
Competition for a market is the struggle to provide a new market andinvolves being innovative. The competition focused on what thesociety may perceive as the right market practice. New products canbe sold online through the internet. Innovation in competitive marketentails, taking something that has been done by someone else andmaking an improvement by focusing on what had previously been leftout. The emphasis is coming up with an improved product. Additionallyinnovation involves the introduction of new technologies and theinformation to assist in the erection of new and exceptionalstandards in the market (Tkatchova, 2011 p.77). On the other hand,competition in a market is the conventional view of the market powerstruggle, and there is a concentration on the actions of awell-established market by the people who participate in the tradingactivities. In such cases, firms can inflate prices so that there canbe an attraction of all customers (Philips, 1999, p.37).
Nascent market is an economic terminology that means a new marketthat is free from a high population of sellers. In an attempt toapproach new technology in a nascent market, a firm has to come upwith new ideas that have not been invented to attract customers inthe market. Knowing the competitive dynamics in the market isimportant before approaching a new technology in the market(Tkatchova, 2011 p.77).
2. How openstandards affect market development
The open standard in the computer system context relates to a set oftechnical specifications and protocols created by many companies andindustries. Availability is, therefore, open and a single vendor donot have dominance (Chiu, 2002, p.17). Similarly, the open standardmakes every competitor free to enter the market to avail theirproducts to the consumers. Competitors offer substitute goods andchannels of delivery. In fact, the Internet is an open standard, andthere is the tendency to increase competition. Because information toeveryone is available almost everywhere, the Internet inherentlyshifts power to buyers who can quickly discover the lowest-costprovider. The Internet gives many new opportunities for valuecreation and products branding. By that, the market developmentincreases because open standards allow everyone to enter and providebetter skills and information. Moreover, there are never anyconstraints on the marketplace when the internet is in use (Chiu,2002, p.17).
Pros of OpenStandards
Open standards have several advantages in an economic scenario. Forinstance, with the norms, there are always reduced chances ofbecoming locked into a particular vendor or technology. Also, withthe presence of the relevant features, there will be no need toutilize the same software in writing the date files. Using openstandards also offers better security, and there is a protection ofdata that result from the use against obsolescence of suchapplications. Open standards may increase innovation and as wellallow people of diverse backgrounds to participate. Finally, the openstandards help in transfer and usage of information while removingthe unnecessary barriers ensuring that everybody has access to thedata (Chiu, 2002, p.17).
Cons of openstandards
There are a lot of ongoing parallel developments on open sourcesoftware hence creating confusion on what functionalities are presentin which versions. Using them can be difficult to use becauseoperating the system requires someone to learn. An individual needsto train and master that similarly means the possibility ofadditional costs. An example is using Linux as an operation system(Chiu, 2002, p.19).
3. What are thenecessary conditions for price discrimination to be effective?
Price discrimination is when prices that are different becomeapplicable for the same product or commodity by the same provider.Sellers use price discrimination to get the highest possible revenuefrom each customer. The goal of price discrimination is to cut pricesfor customers that are affected by price. Some consumers benefit fromlow prices. Price discrimination can also avoid congestion orovercrowding. There are those customers that would only rush topurchase when the prices reduce (Laudon, &Trevor, 2014, p.773).
Each group of buyers has a separate price elasticity of demand. Thefirm can handle this by equalizing the marginal revenue generated byeach group earn a higher level of earnings than would be the case ofa uniform price charged. There should also be markets that aredistinct and separate to prevent resale by those customers who buy ata lower price. Consumers buying goods in a market with a lower priceshould not be able to resell the goods to other clients in anothermarket at a higher price. Resale must be impossible for pricediscrimination to exist (Philips, 1999, p.16).
Another condition is that the price elasticity of demand must bedifferent in each market. There should be an ability of themonopolistic firm to identify different segments of the marketaccording to price elasticity of demand. The particular supplierwould increase the cost without affecting the elasticity of demandcurve. The demand curve would remain inelastic with the rise inprices. The supplier can also reduce price if the demand is elasticto increase total profits and revenue. For price discrimination to beeffective the price elasticity of demand in the markets wheredifferent rates apply should be different. The price elasticity ofdemand should be different. The price elasticity of demand should belower in the market where the monopolist charges a higher priceimplying that consumers are less responsive to price changes in thatmarket. On the other hand, the discriminating monopolist charges alower price in the market where price elasticity of demand is highersince consumer demand is more responsive to price changes in thismarket (Philips, 1999, p.16).
4. Please present anargument for, or against, taxation of e-commerce
Taxation of electronic commerce should not be encouraged. Forexample, the Internet commerce is still new, and no one is sureconcerning the future in the coming years. Knowing how to tax ispredicted is, therefore, a challenge. The fundamental question is howe-commerce interacts with traditional principles of taxation (Basu,2007, p.4). How to know the taxed factors is also a problem. Smallcompanies that operate online cannot manage to apply the concept intaxation because taxation leads them to the realization of fewerprofits. Merchants will experience burden that frequent in all theretailers due to jurisdiction regimes. Identifying countries thathave tax jurisdiction over goods that electronically transacted isinvolved. Electronic commerce allows one to have transactions withdifferent people from various countries without having to enter eachof them. Furthermore, having a taxation scheme that is complementedundermines privacy (Philips, 1999, p.16).
Also, other considerations stemming from technological realities mustalso be taken into account to determine whether an Internettransaction may be taxable and if so, which party is liable for thetax. The current income tax principles are too rigid to adaptsufficiently to the exponentially burgeoning virtual world andtechnology with the consequence of the increasingly ineffectiveapplication of tan in e-commerce (Bardopoulos, 2015, p.7).
5. Laudon and Traverpresent Supply Chain Black Swans: Adaptive Supply Chain. Pleasearticulate the economics of this concept and describe what are thenecessary technologies needed for Adaptive Supply Chain
Supply chain adaptability is the ability of the supply chain tochange the behavior for the prevention, improvement or acquisition ofnew characteristics for the achievement of supply chain goal inenvironmental conditions that vary in time and the aprioristicinformation about which dynamics is incomplete (Ivanov, &Sokolov, 2010, p.26). An adaptive supply chain is also dependent onthe real time integration. It requires implementation of anenterprise integration strategy in the supply chain. In the currentenvironment where risk management is critical, organization need toprepare for eventualities such as sudden changes in cost and exchangerates. The supply chain itself should be designed to withstand thisperiods, and ensure long term security of supplies.
The adaptive supply chain is a network organization that collaboratesalong the entire adding value to chain and output life cycle toprocure raw materials and convert them into final products that go toretailers (Philips, 1999, p.18). Existing supply chains have matcheswith the old assumptions of unlimited economic growth and utterstability of environment conditions.
Numerous companies have achieved success by ensuring theirsupply-chain strategy closely resembles their business strategy andstays flexible and adaptive to all the key elements in an increasinguncertain and volatile business environment. Failure of businessorganizations to maintain these features can have negative effects ona company.
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Ivanov, D., & Sokolov, B. (2009). Adaptive supply chainmanagement. Springer Science & Business Media.: Springer,60-80.
Laudon, Kenneth &Trevor, Carol (2014) : Business.Technology. Society (10), 760-780.
Phlips, L. (1999). The economics of price discrimination. Cambridge[u.a.: Cambridge Univ. Press, 15-40.
Tkatchova, S. (Ed.). (2011). Space-Based Technologies andCommercialized Development: Economic Implications and Benefits:Economic Implications and Benefits. IGI Global, 65-80.