Week 03 -- How Politicians and Entrepreneurs Affects the Market

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This post is a response to the question "In theory, the ebb and flow of the production market is dependent on the decisions made by consumers. However, this is not always the case. What are some ways that politicians and entrepreneurs can manipulate these changes?" posed by mackenziejones@mackenziejones

There are many things that limit the ability of the consumer to affect the market through solely their demand and purchases. First of all, politicians and government play a role in this through what they endorse, encourage, and require. For example, let’s take vehicles for example. In theory, if consumers’ demand was the sole factor that affected production of certain products, any detail that is featured on a vehicle would be the result of perceived demand of that feature by consumers. However, there are many laws and/or policies that mandate specific safety requirements to be met before vehicles are allowed to be sold to consumers. If the only factor in the production market were consumer demand, we may conclude that the safest vehicles would be the most commonly purchased product which may eventually lead to the majority of companies striving toward meeting these safety specifications anyway, but there would likely still be companies that would sell less safe or unsafe vehicles at lower prices and compromise the safety of people in need of a vehicle but unable to afford a safe one.
There are also many ways that entrepreneurs and/or companies can limit the influence consumers. The way that immediately comes to mind is large companies purchasing smaller companies in order to reduce competition. When there is less diversity of business, consumers are less able to take their business elsewhere. For example, let’s think of streaming services. One service may be offering similar shows as another but for a smaller fee and with no commercials. Larger streaming companies would be able to purchase the smaller company, but then implement a higher fee and add in commercials unless you upgrade your plan. Consumers may find themselves in a situation where if they still wish to stream their favorite shows, they must comply with these new costs or not watch at all. This is still a situation where consumers hold power, but less so than before when they could simply choose who they wished to do business with for a specific service.

Week 03 -- How Politicians and Entrepreneurs Affects the Market | Ecency