Do the FANGs need to be regulated?

FANGs – Facebook, Amazon, Netflix and Google.

https://www.economist.com/news/briefing/21735026-which-antitrust-remedies-welcome-which-fight-techlash-against-amazon-facebook-and

Harms to consumer	Benefits to consumer	Positives of regulation	Negatives of regulation
Damages democracy by creating filter bubbles. Decreasing diversity in opinions/goods/services available to people due to the lack of competition.	Provide services for free/inexpensive.	Trust-busting (trusts are large companies with lots of market power) to open up opportunities for competition.	Possible increasing costs, loss of network effects/economies of scale. So lower profits.
Addictive – studies have found people who spend lots of time on social media to be more depressed. Business models encourage unhealthy/addictive behaviour.	More personalised user experience, as FANGs have the data to make this possible.		Hard to price regulate companies that don’t charge Price control backfires when companies don’t charge!
Barriers to switching services – in some cases there is no alternative at all.	Network effects - can make user experience better.		Disincentive for companies to scale up
Privacy concerns.			Regulatory capture
Extreme material.
Promotes inequality (?)

Comments

The Philips curve

The Philips curve The Philips curve suggests a tradeoff between unemployment and inflation - to decrease unemployment, inflation has to rise. This creates a conflict between two macroeconomic objectives - targeting inflation at 2% (in the UK) and decreasing unemployment.

PPF

Production Possibility Frontier Production Possibility Frontier (PPF): the curve showing the maximum combinations of goods or services that can be produced in a given time with available resources. Assumptions: - Production over a specific time period like one year - Inputs are fixed during this time period - Technology doesn’t change during this time period · Meaning of points on and around the PPF—efficiency When you are on the PPF, you are working at maximum efficiency or full capacity. If you are within the PPF then you are under-utilising existing resources or resources are being used inefficiently. There is underemployment. The economy cannot produce past the frontier. Points outside the PPF are unattainable given the current inputs. · Causes and me...

3.1.3 Demergers

Demergers A demerger is the breaking up of a firm into separate firms. e.g Sports Direct selling off Dunlop in 2016. PepsiCo splitting off foods businesses (KFC, Taco Bell, etc.) into a separate corporation, Yum Brands. Later Yum Brands demerged into Yum China and Yum Brands. Reasons for demergers Diseconomies of scale - the opposite of economies of scale, where average costs begin to rise as output increases. May occur due to it being difficult to retain control on the expanding business - principal-agent problem may arise. Also less co-operation by employees who feel more alienated and as a result less productive - they feel less of a connection to the business. May also be hard to co-ordinate and communicate between locations and employees when a firm is large. Miscommunication can again lead to costs rising. To focus on core businesses to streamline costs and improve profits. The firm may have expanded into different markets and expe...

Edexcel AS/A Level Economics revision

Search This Blog