Competition for Scarce Resources

In: Other Topics

Submitted By vijaysin2000
Words 17328
Pages 70
RAND Journal of Economics Vol. 41, No. 3, Autumn 2010 pp. 524–548

Competition for scarce resources
P´ ter Es˝ ∗ e o and Lucy White∗∗∗ Volker Nocke∗∗

We model a downstream industry where firms compete to buy capacity in an upstream market which allocates capacity efficiently. Although downstream firms have symmetric production technologies, we show that industry structure is symmetric only if capacity is sufficiently scarce. Otherwise it is asymmetric, with one large, “fat,” capacity-hoarding firm and a fringe of smaller, “lean,” capacity-constrained firms. As demand varies, the industry switches between symmetric and asymmetric phases, generating predictions for firm size and costs across the business cycle. Surprisingly, increasing available capacity can cause a reduction in output and consumer surplus by resulting in such a switch.

1. Introduction
Standard models of industrial organization treat inputs as being in perfectly elastic supply and their trade disconnected from the downstream market. However, in many real-world industries, the firms that compete downstream also face each other in the input market where supply is inelastic. For example, jewelry makers that vie for the same customers also compete for precious stones whose supply is limited; competing airlines divide a fixed number of landing slots at a given airport; software companies that produce rival operating systems draw from the same pool of skilled programmers; retailers of gas (petrol) use a common input that is in scarce supply; and so on. In this article, we investigate the interaction between efficient input markets and competitive downstream industries and find some unexpected results. We study a model where firms with the same decreasing-returns technology compete first for scarce production capacity in an input
University of Oxford; peter.eso@economics.ox.ac.uk. University of Mannheim,…...

Similar Documents

Scarce Resources

...Scarce Resources Article Nurses depend on a variety of resources every day that affect patient care. Staffing issues and supply shortages are sometimes daily battles. A growing concern is drug shortages to hospitals, clinics, and doctor’s offices. Drug shortages can affect drug therapy, postpone medical procedures, and result in medication errors. An article published in the American Journal of Nursing in November 2011 discussed the national impact of the drug shortage on health systems. Since 1996 the problem of drug shortages has steady increased. As of 2011 there were 232 drugs on the national drug shortage list. “The areas most commonly reported shortages were surgery and anesthesia, emergency care, cardiovascular care, gastrointestinal and nutritional care, and pain management. Thirty-five percent of hospitals reported that the shortages had resulted in adverse outcomes” (Carter, 2011, p. 14). One specific example is the propofol shortage. Propofol is used for sedation during procedures and ventilated patients. Alternative medications are more difficult to titrate resulting in under or over sedation (Carter, 2011). There are several factors that contribute to the national drug shortage. The lack of available raw or bulk materials has a significant impact on drug shortages. “Raw material shortage can result from a number of factors, including a sole source manufacturer that ceases operation, suboptimal quality of the raw material, and wars that disrupts......

Words: 658 - Pages: 3

Competition

...How Competitive Forces Shape Strategy* By Michael E. Porter The essence of strategy formulation is coping with competition. Yet it is easy to view competition too narrowly and too pessimistically. While one sometimes hears execu-tives complaining to the contrary, intense competition in an industry is neither coinci-dence nor bad luck. Moreover, in the fight for market share, competition is not manifested only in the other players. Rather, competition in an industry is rooted in its underlying economics, and competitive forces exist that go well beyond the established combatants in a partic-ular industry. Customers, suppliers, potential entrants, and substitute products are all competitors that may be more or less prominent or active depending on the industry. The state of competition in an industry depends on five basic forces, which are di-agrammed in Figure 1. The collective strength of these forces determines the ultimate profit potential of an industry. It ranges from intense in industries like tires, metal cans, and steel, where no company earns spectacular returns on investment, to mild in indust-ries like oil field services and equipment, soft drinks, and toiletries, where there is room for quite high returns. In the economists’ “perfectly competitive” industry, jockeying for position is un-bridled and entry to the industry very easy. This kind of industry structure, of course, offers the worst prospect for long-run profitability. The weaker the......

Words: 4294 - Pages: 18

Competition

...fifth largest automaker in Europe. Ford is the eighth-ranked overall American-based company in the 2010 Fortune 500 list, based on global revenues in 2009 of $118.3 billion. In 2008, Ford produced 5.532 million automobiles. And employed about 213,000 employees at around 90 plants and facilities worldwide. Competition Factor Between the 20th century 80s to 90s, the growth of automobile industry is very slow, and many American companies try to use discount and some preferential policy to attract customers. At the same time, more and more Japanese cars were preferred by customer cause of their high quality and attractive price, like Honda, Toyota and Nissan. Compared with Ford, Japanese cars used higher technology and control the price at the same time. So how to prevent it? Before the umbrella break, Ford should have a good discernment, not only focus on itself or American competitors, but also the whole world. Let’s see the picture: When the problem was almost happening, I would try to know how did they do that, nothing is prefect, everything has its defect. So find out the defect and strong myself to catch up with competitors. With the high competition in the U.S, I think Ford can expand its global market, like China. Nowadays, China has a high quantity demanded good chance for Ford to get more profit back. Most Chinese people like American brand, because they just think the quality is much better than Japanese car. Japanese car’s material quality......

Words: 3987 - Pages: 16

Scarce Resources-Nursing Shortages Nur/531

...Scarce Resources-Nursing shortages Nursing shortages has become a global issue facing many countries. The scarcity of nurses is expected to increase as demands for health care services increase. Scarcity of resources in health care is a multi-faced problem with multiple causes ranging from nurses leaving the profession because of job dissatisfaction, retiring baby boomers, increasing health demands with decreasing number of those entering the profession, shortage of nurse educators and nursing school, and lack of nursing program funding (Buchan & Aiken, 2008). Nursing shortage is not only a shortage of individuals with nursing qualification but also a shortage of qualified individuals who unwilling to work under current conditions. The American health care system is on a time bomb waiting to explode. The Nursing Shortage Influencing Factors Nurses leaving the profession because of job dissatisfaction Inappropriate distribution of nursing resources through inadequate career support, in appropriate skill mix and utilization, and poor retention incentives lead nurse’s job dissatisfaction (Buchan & Aiken, 2008). Inability of nurses to advocate for patients’ safety causes job dissatisfaction leading to poor job performance and negative patient outcomes. Therefore, nurses will leave the profession because of guilt and dissatisfaction for inability to perform to their best abilities. Aging Registered Nurses (RN) Workforce The fewer RN population entering the profession,...

Words: 1036 - Pages: 5

Competition

... THE COMPETITION ACT, 2002 No. 12 OF 2003 as amended by The Competition (Amendment) Act, 2007 2007 THE COMPETITION ACT, 2002 1 No. 12 OF 2003 [13th January, 2003.] An Act to provide, keeping in view of the economic development of the country, for the establishment of a Commission to prevent practices having adverse effect on competition, to promote and sustain competition in markets, to protect the interests of consumers and to ensure freedom of trade carried on by other participants in markets, in India, and for matters connected therewith or incidental thereto. BE it enacted by Parliament in the Fifty-third Year of the Republic of India as follows:— CHAPTER I PRELIMINARY Short title, extent and commencement 1. (1) This Act may be called the Competition Act, 2002. (2) It extends to the whole of India except the State of Jammu and Kashmir. (3) It shall come into force on such date as the Central Government may, by notification in the Official Gazette, appoint: Provided that different dates may be appointed for different provisions of this Act and any reference in any such provision to the commencement of this Act shall be construed as a reference to the coming into force of that provision. Definitions 2. In this Act, unless the context otherwise requires,— (a) "acquisition" means, directly or indirectly, acquiring or agreeing to acquire— (i) (ii) 1 shares, voting rights or assets of any enterprise; or control over management or control over......

Words: 35018 - Pages: 141

Competition

...Competition as an economic concept is as old as the history of economic thought itself, with its place in economic theory firmly entrenched early on. However, during the past decade which ushered in the age of globalization, new and increasing attention has been focused on competition in policy discussions around the world. “Competition” then became coupled as a matter of course with “policy.” It is not that radically new concepts are being formulated. Rather, a growing need for new approaches in “competition policy” is being felt because of its linkages with international trade that have become highlighted with the reduction of trade barriers around the globe. From the Philippine perspective, however, there also arises a growing need to understand its implications more fully, brought about not just by what is happening in the global arena but even more importantly by various comprehensive policy reforms that have been implemented by the government during the past decade or so. The reforms starting in the mid 1980s have done much to move the economy toward a more market friendly policy environment. Trade reforms, banking reforms, foreign investment policy reforms, deregulation, privatization, and the policy thrusts in general have explicitly and implicitly recognized the benefits from competition. It is thus timely to take stock of where we are and examine the state of competition and competition policy in the Philippines to help sustain and maximize benefits from the......

Words: 2654 - Pages: 11

Scarce Resources

...The Nursing Shortage The nursing shortage has been a highlight of discussion for years. With healthcare reform now happening, the nursing shortage has become more urgent. Baby boomers are retiring making the nursing work force dwindle even further. More patients have insurance and are seeking care. Healthcare facilities are struggling with regulatory agencies that are directly linked to reimbursement and are try to do more with less staff which is leading to burn out. To further compound the issue, nursing professors are retiring and there is a decrease in the number of nurses entering the education work force due to lack of pay, increased amount of stress, and the increase in responsibility (Duvall & Andrews, 2010). With fewer professors, colleges are unable to accept as many students into nursing programs. The nursing shortage is a vicious cycle that needs to be broken. There are a number of factors that are influencing the nursing shortage. First is the lack of nursing professors. With fewer professors, nursing programs cannot accept as many students, which contributes to lacking numbers. Second, many nurses are at or nearing retirement age. 55% of the workforce is over the age of 50. Third, is the demand for nursing is increasing as more patients are obtaining insurance and as the population ages. Fourth, is burnout. Nurses are working short staffed, causing increased stress levels, decreased job satisfaction, and a decrease in quality care. Finally, there is a......

Words: 687 - Pages: 3

Scarce Resources

...The Nursing Shortage The nursing shortage has been a highlight of discussion for years. With healthcare reform now happening, the nursing shortage has become more urgent. Baby boomers are retiring making the nursing work force dwindle even further. More patients have insurance and are seeking care. Healthcare facilities are struggling with regulatory agencies that are directly linked to reimbursement and are try to do more with less staff which is leading to burn out. To further compound the issue, nursing professors are retiring and there is a decrease in the number of nurses entering the education work force due to lack of pay, increased amount of stress, and the increase in responsibility (Duvall & Andrews, 2010). With fewer professors, colleges are unable to accept as many students into nursing programs. The nursing shortage is a vicious cycle that needs to be broken. There are a number of factors that are influencing the nursing shortage. First is the lack of nursing professors. With fewer professors, nursing programs cannot accept as many students, which contributes to lacking numbers. Second, many nurses are at or nearing retirement age. 55% of the workforce is over the age of 50. Third, is the demand for nursing is increasing as more patients are obtaining insurance and as the population ages. Fourth, is burnout. Nurses are working short staffed, causing increased stress levels, decreased job satisfaction, and a decrease in quality care. Finally, there is a high......

Words: 682 - Pages: 3

Competition

...John Johnson Abstract: Competition between various species can differ on the amount of abundant or limited resource availability and the rate at which resources can be consumed. The competitive exclusion principle is that two organisms cannot occupy the same niche. However if two species do not completely overlap, then we see instances of coexistence between each species. However, competition variability is seen between same specie organisms and among differing species. Competition between two of the same species is known as intraspecific competition while competition seen between different species is referred to as interspecific competition. Our competitive study models the two types of competition previously stated while measuring the results to show the effects of each. Our study hoped to show that if there were no intraspecific interaction between species A then there would be no difference in the amount of survivors nor a difference in the average mass of survivors. We show how intraspecific competition is more important than interspecific competition based on the fact that each individual in a population of the same species has a higher need for limited resource availability. Introduction: The purpose of our experiment was to compare competition interactions between (interspecific) and among (intraspecific) species at various density levels. Competition can be defined as any impact of one species over another that results in an adverse reaction or impact of......

Words: 2328 - Pages: 10

Allocation of Scarce Resources

...CHAPTER 6 Allocating Resources to the Project In this chapter we consider the problem of allocating physical and human resources to projects.* The physical and human resources are granted to and used by the project in order to meet the project’s performance objectives. The amount of resources that can be allocated, of course, depends on the timing of the allocation as well as on the total supply of resources available for allocation. Mainly, resource allocation concerns how we allocate specific, limited resources to specific activities (or projects) when there are competing demands for the same limited resources. Projects compete with each other for the same resources in two different ways. First, consider a resource that is limited but is not consumed when used, the services of a specific technical specialist for instance. The problem here is which project gets to use the resource first and which must wait. Second, consider a resource that is limited and is consumed when used, a specific chemical reagent for instance. In this case, the second project may have to wait until more of the reagent can be purchased and delivered. In both cases, the project that must wait may suffer a schedule delay that makes it late. Just as projects may compete for resources, different activities of the same project may compete. Two or more concurrent activities might require the same personnel, or equipment, or even work space. One activity will be given priority, and the other(s) must wait. In...

Words: 18123 - Pages: 73

Scarce Resources

...Scarce Resources Article Christopher Chow Nurs/531 November 17, 2014 Annete Marget Scarce Resources Article For many years now the shortage of nurses has been a difficult global issue that is affecting many countries. Ever since I started high school about 11 years ago, we always here that there is a shortage of nurses. Even till this day, there is a shortage of nurses and it continues to grow. According to (Buchan, 2008), “A nursing shortage is not just an organizational challenge or a topic for economic analysis; it has a major negative impact on health care (Buchan 2006). Failure to deal with a nursing shortage – be it local, regional, national or global – will lead to failure to maintain or improve health care.” Influencing factors to Nursing Shortage There are several reasons why there is such a shortage of nurses that are available. This can be due to heavy population growth resulting in the need of more health care services, not enough nursing students, budget cuts in the hospitals, stress levels that are affecting current nurses which impact job satisfaction which causes them to leave and also the aging of the current nurse workforce. From experience, nurses usually leave their profession due to dissatisfaction. Dissatisfaction can be caused from nurse’s inability to provide excellent quality of care to patients, insignificant change in job performance. Another reason why there is shortage of nurses is due to the......

Words: 1159 - Pages: 5

Managing Scarce Resources, Mistakes Committed in History

...of economic systems. I will discuss the difference of capitalism and corporatism, the perfect competition against imperfect competition and how those economic systems are related to scarcity. I will also examine the role of scarcity on the rationing of products and food and how it influences people decisions on what they do with their money. To conclude I will examine the best solutions possible for the problem of scarcity and the mistakes made by governments when handling the problem of scarcity and their use of economic theories by know economics. Overall I am going to prove scarcity’s hole in every action we take related, or not, to economics. Scarcity is the fundamental economic problem of having seemingly unlimited human wants and needs in a world of limited resources. It states that society has insufficient productive resources to fulfill all human wants and needs. Alternatively, scarcity implies that not all of society's goals can be pursued at the same time; trade-offs are made of one good against others. It is a problem because the more one men wants the less the others can have because of the limited resources on the world. Scarcity relates to the amount of goods and services available for the human race and how much the population wants of a certain product. Economic goods are the products that exist in a limited amount on the world, that are scarce, free goods are the ones that exist in abundance such as seawater and air. Scarcity is not......

Words: 1186 - Pages: 5

Bio 315 Week 2 Individual Assignment Environment, Resources, and Competition

...BIO 315 Week 2 Individual Assignment Environment, Resources, and Competition To Buy This material Click below link http://www.uoptutors.com/BIO-315/BIO-315-Week-2-Individual-Assignment-Environment-Resources-and-Competition Resources: University Materials: Temperature and Precipitation, Intraspecific Competition, and Interspecific Competition located on your student website Imagine you are an ecologist studying ecosystems. In this assignment, you are given a set of data to study. Review the Temperature and Precipitation data, Intraspecific Competition data, and Interspecific Competition data located on your student website. Analyze the data provided in three graphs. Environment, Resources, and Competition Presentation: Prepare a 10- to 15-slide Microsoft® PowerPoint® presentationthat answers the following questions: ·What are the major characteristics of the environment of the chosen ecosystem? ·How do these characteristics affect the animals, plants, and their resources living in the environment? ·Review the temperature and precipitation data. From the data, what can you determine about the role of precipitation and temperature in biomes? ·Review the Intraspecific Competition data. How is the predator community affected by low numbers of prey? How do high numbers of predators affect the prey community? What are some possible effects on other species? ·Review the Interspecific Competition data, what behavioral data might be inferred from this graph? What factors......

Words: 262 - Pages: 2

Bio 315 Week 2 Individual Assignment Environment, Resources, and Competition

...BIO 315 Week 2 Individual Assignment Environment, Resources, and Competition To Buy This material Click below link http://www.uoptutors.com/BIO-315/BIO-315-Week-2-Individual-Assignment-Environment-Resources-and-Competition Resources: University Materials: Temperature and Precipitation, Intraspecific Competition, and Interspecific Competition located on your student website Imagine you are an ecologist studying ecosystems. In this assignment, you are given a set of data to study. Review the Temperature and Precipitation data, Intraspecific Competition data, and Interspecific Competition data located on your student website. Analyze the data provided in three graphs. Environment, Resources, and Competition Presentation: Prepare a 10- to 15-slide Microsoft® PowerPoint® presentationthat answers the following questions: ·What are the major characteristics of the environment of the chosen ecosystem? ·How do these characteristics affect the animals, plants, and their resources living in the environment? ·Review the temperature and precipitation data. From the data, what can you determine about the role of precipitation and temperature in biomes? ·Review the Intraspecific Competition data. How is the predator community affected by low numbers of prey? How do high numbers of predators affect the prey community? What are some possible effects on other species? ·Review the Interspecific Competition data, what behavioral data might be inferred from this graph? What factors......

Words: 262 - Pages: 2

Competition

...Discussion of the European Union’s competition policies Since the turn of the century, Europe’s economic prosperity has rested upon the European Union’s competition policies and regulation of abusive market structures and anti-competitive behaviour. The last fifty years have illustrated that open markets foster innovation and efficiency, while delivering Europeans higher quality products and services at lower prices. This will ultimately lead to Europe’s economic growth, despite the possible infiltration of foreign low cost, low skill producing firms. Suggesting Europe’s future shift towards a knowledge based economy with a focus upon the development and sharing of new technologies (Bannerman, 2002). The following paper will examine the EU’s role and approach towards competition policy with a focus on the economic implications. Abusive market structures and anti-competitive behaviour have been battled by the EU to preserve competition, fearing that cartels will exploit their pricing power to damage consumers. The magnitude of the damage is directly correlated to the elasticity of demand, where a strongly inelastic customer would suffer due to the unavailability of substitutes. Furthermore, anti-competitive market structures create barriers to entry through the ownership of resources, economies of scale, and predatory pricing that stunt future innovation and efficiency. To ensure this competitive environment, the EU......

Words: 645 - Pages: 3

电影天堂 | Michael Peña | HD Craig of the Creek