Question

In: Economics

Perfect competition requires that first are always competing to improve technology, lower costs, and strive for...

Perfect competition requires that first are always competing to improve technology, lower costs, and strive for profits. That means that old technology, and markets, get destroyed. Watch this video creative destruction. https://youtu.be/8N08Kkjq9gA

Identify a product that has been fundamentally changed due to creative destruction (not one mentioned in the video). Explain how the negative impacts are often more visible than the positive impacts.   

Example:

VHS tapes, and VHS rental stores such as BlockBuster Video have been replaced with Redbox and streaming services. The visible impact is that many who were employed in renting videos are displaced. Further, those who produced physical VHS tapes and those who transported them to the stores saw a decline in demand for their services.

However, from a societal perspective, we're now able to watch our videos and use the labor that was previously used in the VHS market to produce something else valuable for society. The result of this is more output for society.

There are winners and losers as technology advances. While society wins, those who are displaced are clearly hurt.

Solutions

Expert Solution

One of the example of creative destruction is the emergence of Multibrand Retails. With the emergence of the Multibrand Retails, there has been a lot of destruction in the markets of simple retailers. This phenomenon may nit be very visible in the developed countries but these are the topic of discussion in the developing countries.

Another product that can be thought is LED bulbs. These LED bulbs has caused a lot of destruction in the electricity bulb market. The reason for destruction in both the examples are as follow-

1. with the emergence of Multibrand Retails there has been job problem of employeyment in the developing countries. This phenomenon is new for them. As a lot of people were employed as selfemployed in retail sector. with the coming of a lot of these multibrand retail these people are going to unemployed.

2. Simolarly, in the bulb market, all those companies that did not adapted with change in the technology they are destroyed. This is because the demand for these has droped simple electric bulbs has been replaced by LED bulbs.

Rahul Sunny answered 2 years ago
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