Question

Discussion—What type of industry to you most buy from?

One of the keys of a Market Economic System is that participants vote with their dollars! Consumers decide the success of firms: if “we” like their products, we buy from them and those firms do well. But if we don’t, those firms fail.

So—how do you vote with your dollars?

But wait—why are we discussing this? This class is all about you learning and thinking about your participation in our economy. So if you don’t “like” something, or think something should change, I want you to have the tools to make that change. Key to our current economy is the increasing centralization of firms (i.e. more industries without significant competition). If “we” don’t want to happen, then “we” need to figure out how to make the change. So…

Initial Post: I would like you to divide your thoughts/discussion into specific areas. Please post a paragraph or two for each prompt. Note—please comment on what you use more of, for we all vary a bit from our norm:

1. Where do you buy food? Is it a grocery store, if so, which one(s). Or do you buy food from individual vendors (bakers, produce sellers, meat suppliers) and if so, which ones. Now—why do you make that choice? Price, convenience, selection or other reasons. Finally, is your selection focus on smaller more perfectly competitive firms or larger firms with more imperfect competition?
2. How do you shop online? Do you use one centralized seller (i.e. Amazon) and if so, which one? Or do you go to individual sellers and use their online sales system, and if so, which ones? Again, identify why you select that market (price, convenience, confidence in shipping, timing, selection, other reasons). Finally, is your selection focus on smaller more perfectly competitive firms or larger firms with more imperfect competition?
3. So, is your selection one that benefits more competitive firms or ones that are Price Makers? Just reach a positive (not normative) conclusion—do not pass judgement on whether selection is “good” or “bad.”

Answer 1

I happen to purchase my groceries from a supermarket which supplies almost all kinds of products across price levels. Individual sellers are contacted only in case of certain specific requirement or due to time constraint. The reason for making purchases from a supermarket is to save time and get better discounts. Selection is more towards large firms who tend to lord over the markets they operate rather than smaller more competitive ones. The area which am living has seen rapid shift towards online mode of purchase which tend to favour giant retail behemoths who are more price makers rather than competitors.

Reasons for this shift are not too hard to understand. While smaller grocery shops offer limited choice and may offer credit once in a while the giant retail stores like Walmart and Amazon take cash upfront and offer multitude of choice. Mom and Pop shops are being edged out in this race since they cannot leverage technology like the corporations can nor do they offer the choice which the consumers of present day crave so much. Across the world this trend is visible and will get more accentuated in days to come. A scenario like US Health care where limited players jacking up prices citing research and development cost is looming large and that too on a global scale.