Essay Last - Details on the effects of the first industrial revolution PDF

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Details on the effects of the first industrial revolution...

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“Cartels are good for economic growth, as they promote stability, investment and industry-wide cooperation.” Discuss with reference to historical examples. Cartels can be good for the economy, firms involved are offered a better opportunity for success and market domination although can have its drawbacks on the economy and other firms in progress. Many outcomes show the consequence of a cartel in the economy are rather diminishing to its growth although often do provide growth in the short run. Using Historical examples and economic proof, I will derive how and why Cartels can be efficient to the Economy. In the economy, cartelization induces instability, creates monopolies, and likely produces excess capacities in times of recessions.

Cartels are perceived as a negative strategy applied by businesses to maximize profits, as they affect market mechanisms where prices are fixed according to the ratio of supply to demand (Hahn et al. 2013). According to the competition committee, the main negative impacts of cartelization are: Artificial restrictions on competition; rising prices; avoiding technological innovations that create constraints (eg, developing specific products or introducing new, more efficient production methods) and limiting employment opportunities (Matache, 2011). Cartels are most commonly found in oligopolistic markets (Bruneckienė et al., 2015b, p. 49), where there are few competitors in the market. Furthermore, collusion is more likely to occur in a moderate growth market, while it is unlikely in a rapidly declining or growing market. In order to increase prices substantially, the demand for the cartel's products must be inelastic enough. Other factors that promote the creation and operation of cartels include excess capacity and the lack or insufficient number of short-term substitutes (Levenstein & Suslow, 2006). Cartels are often demonized in the economy due to their adverse effects, although looking at the Korean automobile Industry it is evident that cartels and cartelisation have also had productive impacts on the economy. Cartel operations in this sector improve efficiency and competitiveness, making South Korea one of the five largest automobiles producers in the world (Parc Jimmyn, 2014). It is evident that the cartel that arose in the Korean automobile industry has some adverse effects contrary to my initial statement. Companies that were involved achieved increased profitability and efficiency (contributes to the achievement of fair economic growth). It also improved competitiveness meaning there were still entrances in the market thus ensuring stability in the economy (stellios & Hancock, 2014). This cartel also had a positive impact on the economy in which it allowed avoidance of an overproduction crisis by limitation of offer (although limited chance for short term economic growth through meeting demands still ensures stability as resources are allocated effectively). Limitations to the number of bankruptcies of companies were also set by fixing prices above the breakeven point. Considering these traits, we can conclude that under certain environmental conditions, cartelization can be a viable commercial strategy. Furthermore, if we consider the revenues collected by the fines generated by the sanction’s cartels, the country as a company has no interest in the disappearance of this form of cooperation between competing companies. Therefore, the imposition of sanctions allows companies to continue to find cartelization profitable, which can generate income for the country and the cartel members. The only ones directly affected are the consumers (Parc Jimmyn, 2014). The Korean automobile industry cartel is rather similar to the German steel cartel. Germanys steel cartel were able to derive multimillion dollars in profit in which further solidifies the case of which cartels can promote opportunity for investment and potential economic growth. Although outed for over price rigging does show that cartels often favour the firms involved rather than the consumers who have to pay at the price set by the cartel. After extensive search and proofing, It is viable to conclude that although cartels may seem risky, they can be detrimental for economic growth in certain developing countries. Further investigations show that in the absence of a cartel, market mechanisms produce significant reductions in product prices, which are implicitly reflected in a company's profitability. Applying this strategy, a dramatic price drop means the bankruptcy of small businesses in certain industries. Thereafter, the offer decreases due to a decrease in the competitor and the price rises again. Consumers are therefore obligated to pay the same price as each industry cartel had operated. To apply to this, Cartels are difficult to maintain due to strong incentives to trade at prices below the agreed price and marginal profits are greater than

marginal costs. These transactions are difficult to detect and make cartel price contracts very volatile. In addition to the desire to maximize profits, companies apply this strategy for the simple reason that high proposals sometimes try to survive in an environment where they can determine selling prices lower than the lowest prices that cover production costs. I will.

Ivaldi, M., 2021. [online] Cepr.org. Available at: [Accessed 8 June 2021]. ember to reference me remember to reference me remember to reference me remember to me remember to ref me rem to ref me rem to ref me

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DW.COM. 2021. Germany fines BMW, Daimler, VW over steel cartel | DW | 21.11.2019. [online] Available at: [Accessed 8 June 2021].

What were the main challenges facing entrepreneurs looking to increase the scale of their firms during the first industrial revolution? During the first industrial revolution, there were a distinct number of challenges faced by entrepreneurs when seeking to expand their businesses including many factors, including technological progress, government policy (intervention), capital, and often economic organization. The impact of economic growth has also changed the rate of scale for entrepreneurs. Alongside human capital available within job sectors where often heavily imbalance thus causing another challenge towards entrepreneurs. Certainly, lack of availability of capital, production efficiency, poor management and recruitment were truly the discouraging challenges that entrepreneurs succumbed to during the first industrial revolution. During the first Industrial revolution entrepreneurs had to develop alternate methods of sustainably converting heat into energy. This aired for the invention of the steam engine which intuitively required human power due to lack of technology. This human power meant that human capital was heavily required in this field and given it was blue collar, there was an abundance of supply (after factoring wage). The steam engine was discovered to be highly inefficient meaning that entrepreneur Thomas Savery (Micro-inventor) and Thomas Newcomen’s (Macro-inventor) costs of production would often exceed production generated. Further development methods were integrated in order to ensure efficiency of the steam engine, although increased the number of newer entrepreneurial challenges. James Watt (1768) invented the independent condenser. Greater efficiency means that applications can be found far from mines and factories. This invention created more entrepreneurial challenges in itself due to the cost of capital for maintenance. The centralised use of power in factories also resulted in another entrepreneurial challenge. Powered machines began to come into use which at first had their advantages of reducing workload and increasing productivity whilst ensuring the cost of being upkept. Beforehand, these powered machines revolutionised many industries, especially the cotton industry in Britain. But the true challenge came when human capital were required to be trained on how to manage and ensure efficient use of machines. This substituted time for productivity leading to less productivity in the short run (due to training) and potential for more productivity in the long run. The use of powered machines allowed entrepreneurs to convert common energy sources into multiple different uses. Looking at the case of Josiah Wedgewood, it is clear that the factory was the main challenge faced by entrepreneurs during the first revolution. Josiah developed and improved ceramic bodies in his factory. With all the innovations and favourable plans created by the concentration of power, Josiah and his factory are facing more and more challenges. Due to the difficulty of financing a large factory, Wedgwood does not have a financial institution. Since factory locations felt like prisons, many people do not want to work in a factory. This led to a low hiring rate and a lack of skilled workers in the industry. Also, the shift in factory work from one task to another means more working hours and more workers are dissatisfied. The first industrial revolution witnessed a change in the organizational structure, that is, the "entrepreneur form", with the owner at the top and the subsidiary company at the bottom. This has led

to the challenge of limited business expansion capabilities and more capital requirements. Along with the poor discipline and supervision, factory entrepreneurs faced difficulties in ensuring development. In short, the main challenges faced by entrepreneurs in the first industrial revolution are more related to their inability to maintain company-wide management issues. At the same time, through empirical analysis, an effective method of energy exchange in machinery has been discovered, which has led to multiple challenges as development takes place. Capital for investment into machinery was necessary during the first industrial revolution and with not enough allocation towards capital, it became a serious issue in terms of being able to scale out and create industrialisation. For example, the industrial application of Watt's basic invention of the steam engine was delayed for nearly 20 years until Matthew Bolton provided funding and promoted the commercial success of the steam engine.

Mokyr, J., 2021. Entrepreneurship and the Industrial Revolution in Britain. [online] Available at: [Accessed 9 June 2021]. McKENDRICK, N., 2021. Josiah Wedgwood and Cost Accounting in the Industrial Revolution. [online] Wiley Online Library. Available at: [Accessed 9 June 2021]. Ebrary. 2021. Centralisation. [online] Available at: [Accessed 9 June 2021]. Remember to reference me remember to reference me remember to reference me remember. Rem to ref me rem to ref rem to ref me rem to ref me rem to ref me

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