Danh Tran
BUSI 620
1.Why are cartels unstable and why do they often fail?
Several things can contribute to instability and failure of cartels. Two types of cartels
exist, market-sharing and centralized the nature of business is expansion and as market
share cartels seek to expand, the profit that they receive from the cartel agreement may be
less than what they feel they deserve. This gives way to initiatives for one or more parties
to cheat the others. A centralized cartel has set prices that allow all parties to share profits
from product or service revenue. Even with this in mind there are various governmental
and regulatory bodies that create deterrents and policies to prevent price fixing and cartel
activity. Added to this is the entrance of firms into an industry that do not have cartel
affiliation. These firms help to promote competition and ease the strong hold that cartels
can pose on an industry.
2.What is meant by (a) Zero-sum game? (b) Nonzero-sum game? Provide examples in your
discussion.
Zero-sum game is one in which the gain of one player comes at the expense and is
exactly equal to the loss of the other player. For example, if firm A increases its market
share at the expense of firm B by increasing its advertising expenditures, firm B, given
that they decide to also increase the advertising expenditures, firm A might not be gain
any market share. On the other hand, nonzero-sum game refers to the situation when the
Discussion Board 5
3.
gains or losses of one firm do not come at the expense of or provide equal benefit to the
other firm. For example, if increased advertising brings benefit to both firms, we will
have nonzero-sum game. (Salvatore, 474)
Respond to the charge that immigrants flood the labor market and drive down wages in
the U.S.
It is true that immigrants increase the labor force tremendously. Be it illegal or legal
immigrants, they play an important part in the U.S economy and businesses. To sum it up,
John Stapleford stated in Bulls, Bears, and Golden Calves: "There is no evidence that
over time, immigrants reduced wages, lowered the living standards of the resident
population or raised unemployment rates." (Stapleford, 227) Immigrants, facing
difficulties in life and shortage in incomes, are willing to do the work while asking for
less money received comparing to the local residents. This is the base for those who
would argue that immigrants drive down wages in the U.S. However, this should be no
more than a boost to local residents. Since the competition is higher due to increasing
number of immigrants, local people ought to work harder to compete with immigrants
and this should be healthy to businesses. For firms that hire workers based on
qualifications, local people are still considered more valuable due to higher-valued
profiles. Therefore, they still play big roles in businesses. More importantly, immigrants
do not just take part in laboring in businesses, they also own businesses and create more
job opportunities for other immigrants as well as local people. And there is no proof that
businesses owned by immigrants only look to hire other immigrants. Wages have been
proved to be unchanged. As a result, immigrants actually are positive boost to the
economy that looks like it could use as much help as it needs.
