Microeconomics assignment
The effect of current economic conditions on factory opening/closing
The article asserts that the manufacturing sector is central to the economic activities in regional areas and the world. Nations that have great powers such as the Roman Empire and the Chinese Empire have been producing the most goods as a result of technological capabilities (Stemler, 2016). During the industrial revolution, the invention of new manufacturing processes increased employment opportunities. However, the industrialized world led to great depression and caused an economic downturn. Also, the great depression affected consumer spending, and the loss of jobs and the demand for goods decreased. However, the loss of jobs resulted in a positive trend in the manufacturing industry since experienced productivity growth (Stemler, 2016). In other words, manufacturing became healthier since the job was a strength. In general, the great nations recovered from the great depression, and they were able to maintain their manufacturing capabilities. This resulted in the developed of manufacturing jobs (Stemler, 2016). However, it is important to understand that even though the manufacturing jobs accelerated in the great nations, the current economic condition is that firms must meet the customer expectations; that is new technologies, manufacture customized products, and demand variability.
On factory opening/ closure, the current economic condition will increase factory opening and moreover, the factories will need technical change and operate on a global scale (Stemler, 2016). Due to the competition increase, the current economic condition expects the factories to improve the products and technology. Note that economic changes characterize the current economic condition. For factories to adapt to the changes and increase economic growth, they need technological improvement. My opinion is that the current economic condition, which is characterized by profound changes will increase the openings of new firms. Note that in today's economy, manufacturing firms generate national wealth, improves economic growth, and creates jobs (Stemler, 2016). Therefore, the changing economy will push manufactured to open more factories, but due to fundamental changes in consumer demand, factories will explore a new way of meeting consumer demands.
The effect of current economic conditions on monopoly power either neutral or regulated legal or illegal.
Posner (2000) states that the current economic condition is dynamic. Therefore, the U.S antitrust law will not be able to regulate the current economy that focuses on manufacturing new products and services. An important point to understand is that the antitrust doctrine can address the current competitive issues, but it lacks technical resources. Note that the current economic environment is complex, and it is causing many changes. For example, modern industries that deal with intellectual properties require a monopoly position. These industries produce intangible properties which are expensive to create and have fixed costs (Posner, 2000). The author states that legal protection would help these industries to gain benefit, and free riders will not have the opportunity to use the intellectual property. However, legal protection will influence the consumer to change direction and purchase substitute products. Therefore, the creator of intellectual property will not gain marginal costs. Thus, these industries need price discrimination or the act of charging different prices for similar products (Posner, 2000). In other words, owners of intellectual properties need a monopoly system or complete protection of intellectual property.
According to my opinion, the current economic condition allows industries to have a natural monopoly power to sustain competition. Note that the intellectual and industrial property has dominated the economy. Besides, the current economy is a high tech world where industries experience a barrier to entry. Note that industries that operate in a market where there is a barrier will make the surviving firms to enjoy a minimal profit (Posner, 2000). The natural monopoly will allow the first industries in the market to enjoy ownership, and more importantly, it will protect the critical resources.
References
Stemler T., (2016). The economy’s effect on the manufacturing industry. Plant Engineering. Retrieved from: https://www.plantengineering.com/articles/the-economys-effect-on-the-manufacturing-industry/
Posner, R. A. (2000). Antitrust in the new economy. Antitrust Lj, 68, 925.
