Music Industry Entry Barriers
Please, some help on some questions of economics?
3. What barriers to entry exist in the following industries?
a. electric power utilities
b.word processing software
c.cold remedies
d. textbooks
e. family medicine
5. To what do you attribute declining sales in the music industry? Where do you obtain your music?
6. Suppose that by providing ore exposure to new groups, P2P systems increased the demand for legal music. Would that justify the illegal act of file sharing?
3. a. The power grid to supply electricity to homes and businesses are very expensive to build. It is inefficient to build a second grid. The costs of building the system are a sunk cost. A new firm would have to pay these costs all over again. They would not be able to recover these costs as if two firms competed to supply the electrical transmission services they would cut their prices to win business and would not make a sufficient contribution to their fixed costs.
b. Word processing software must produce files that are compatible with existing software. In order to enter the market the firm would have to spend alot of money developing compatible software and would have to spend alot of money promoting their new software until it became popular.
c. Cold remedies, as pharmacueticals, must be developed and pass clinical trials, which are very expensive. Also, people tend to use a familiar brand so unless an existing brand name is bought or substantial money is spent on establishiung a brand by advertising sales will be low.
d. Most teachers use the same textbook they used last year, so you would have to build up a market/brand for a new textbook.
e. I don’t know what this means.
5. The classic answer is increasing use of other sources of music such as file sharing and spotify. I mainly get my music by buying it at local gigs and listening on the radio and tv, but I think your teacher or lecturer wants to know where you get yours from.
6. This seems more of a moral question. What do you think?
Libertarianism, Economics, Entertainment Industry, The Internet, and Competition