Lecture Extender Examples 569
Chapter 23 Perfect Competition
Why Exits Have Followed Entries at Online Auction Sites
Since the mid-1990s, individuals have been using online auction sites such as eBay, uBid, and Yahoo! to
sell off old clothes, collectibles, and other used items that they find when cleaning out closets and attics.
During the early 2000s, manufacturers and retailers discovered that online auction sites were useful for
selling unsold inventories of items such as digital cameras, lawnmowers, and laptop computers. Sharper
Image, Sears, and Hewlett-Packard are among the companies that regularly sell off inventories of
outdated products in online auctions.
Pressuring Japanese Retailers to Equalize Price and Average Total Cost
Since the late 1990, discount retailers such as Walmart and Costco from the United States and Carrefour
from France have entered the Japanese discount-store industry. To be able to reduce their prices to compete
with these foreign retailers, Japanese companies have had to become cost efficient. They have had to
downsize traditionally complex distribution networks. By establishing direct links to manufacturers, they
A Monastery Takes Advantage of Unhindered Entry
Catholic monks in western Wisconsin who were using laser printers to create documents wondered why
replacement toner cartridges were so expensive. When they discovered that they could purchase generic
printing supplies, remanufacture printer toner cartridges, and offer them for sale on the Internet, they
570 Miller Economics Today, Nineteenth Edition
The Wind Power Industry
Some attractive features of producing electricity from wind power are that the wind is clean and free. It does
not have to be produced first as a fuel, then transported, and stored until it is needed. No wonder wind power
generation has become an attractive way to produce electricity, especially as oil and natural gas prices have
Web Shopping May Not Lead to Lower Prices
One of the major predictions that economists made about the increased use of e-commerce was lower
overall prices. Research has shown, though, that the main benefit of e-commerce is not necessarily low
explicit prices for standard items. Indeed, the most popular book sites such as Amazon.com do not offer
the lowest prices.
The major benefit of e-commerce is that the Internet offers a selection of products that is impossible to
A Common Pricing Denominator in Europe
Perfect competition is more likely to thrive in an environment in which buyers and sellers have more
nearly complete and equal access to information. Historically, a factor hindering the development of
European-wide competitive markets has been that a consumer in a country such as Portugal who was
Lecture Extender Examples 571
Decreasing Costs and the Market for Transistors
The world output of transistors, the main components of microprocessors, has exploded from a little more
than 1 billion in the late 1960s to more than 1 quintillion today. During this same period, the average
Can the Government Cure Market Failure Due to Asymmetric Information,
or Are Lemons Here to Stay?
If information is not the same for buyers and sellers, markets may be dominated by low-quality products.
This type of market failure is due to asymmetric information. It is called the lemons problem because cars,
particularly used cars, that turn out to be bad deals are called lemons. The potential buyer of a used car
has relatively little information about the true quality of the car. The only way the buyer can find out is to