Replies: 2 comments
This is how things work in a competitive, capitalistic economy. Too many suppliers, too many goods, prices go down, supplierswith high cost structures make little or no money. eventually they exit the business. Supply and demand come into balance. If demand exceeds supply, prices increase, suppliers make more profits, attracting new entrants to the market, increasing supply; again supply and demand come into balance.
When many companies can suddenly expand their customer base - say, via the internet - this presents the consumer with more choice, consumers are able to pay less. We are still in the cycle of expanded supply and increased consumer choice, which is leading to downward pressure on prices and therefore profits.
As soon as more consolidation takes place, or demand picks up, the profit situation will remain under pressure.
It's happened many times before, and will probably happen many more times in the future.
Posted by MCW @ 04/12/2002 03:07 PM EST
This is how things work in a competitive, capitalistic economy. Too many suppliers, too many goods, prices go down, supplierswith high cost structures make little or no money. eventually they exit the business. Supply and demand come into balance. If demand exceeds supply, prices increase, suppliers make more profits, attracting new entrants to the market, increasing supply; again supply and demand come into balance.
When many companies can suddenly expand their customer base - say, via the internet - this presents the consumer with more choice, consumers are able to pay less. We are still in the cycle of expanded supply and increased consumer choice, which is leading to downward pressure on prices and therefore profits.
As soon as more consolidation takes place, or demand picks up, the profit situation will remain under pressure.
It's happened many times before, and will probably happen many more times in the future.
Posted by MCW @ 04/12/2002 03:08 PM EST