Sunday, January 25, 2015
Drew Hanson, chapter 1, question #6
The most interesting example of the power of markets, in my opinion, was the competition in airlines in whatever aspect they could compete in. When prices of air travel were regulated, the airlines had nothing to compete in except quality of the flight so they tried to make flying as pleasurable of an ax pertinence as possible. When the regulation was lifted, the competition went back to default: a competition for the lowest possible price for the service. This example of competition is essential to the free market system. With an incentive to be better than the competition, businesses will compete.
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It's good to see you making big strides in your education of economics.... Continue to learn
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ReplyDeleteI also thought that airplanes making accommodations better because their prices were the same was very interesting. Compared to nowadays when people are treated like animals.
DeleteI do believe that non-regulated competiton is benefitial to the individual and society as a whole when it comes to specific areas of services and goods (such as air travel) and promotes the free market system. Interestingly enough, competition in a free market system may lead to a diminished quality of certain services and goods (such as air travel), implying that the individual and society must shift their incentives from quality to availability. Such trade off must be recognized in order to prevent psychological manipulation of decisions (pertaining to goods and services).
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