A Snapshot of Kodak

This past year Kodak has gone through some serious internal changes.  While it built one of the first digital cameras in 1975, it seems to have augmented the very businesses worsening their plight—smartphones.   

                By 1976, Kodak accounted for 90% of film sales, characterizing the compay as essentially a monopoly.  On the other end of the spectrum, Fujifilm, Kodak’s main competitor, has actually done surprisingly well.  Both companies foresaw their potential demise in the 1980s with the advent of digital photography, a private good, but only Fujifilm responded effectively.

                After spending in excess of $9 billion on 40 companies since 2000, Fujifilm has completely scratched its original business venture with diversification.  For instance, the company launched a series of cosmetics utilizing the additional thousands of pounds of chemical compounds they possessed for printing.  Their sudden ingenuity has now reversed roles, making Fujifilm the main monopolist.

                Unfortunately for Kodak, Kodak acted like a stereotypical change resistant firm and kept its original model of film and digital photography, only to feel the strong whiplash of smartphone success in the late 2000s. Film for Fujifilm went from 60% of its profits in 2000 to basically nothing now.  And because of this, Kodak’s long prosperity seems to be coming to an end.

Source:  “The Last Kodak Moment?”  The Economist

A Medley of Market Structures

            Throughout the United States, a myriad of market structures exist.   For example, the monopolistic competition template is copious in number, while the oligopoly market structure tends to be rarer to find.  Colgate and General Motors serve as excellent examples.

            Colgate has been a successful seller of toothpaste for decades.  Entrenched in a monopolistic competition market, there are many competitors selling a very similar product.  Therefore, while market entry is not that easy, it’s certainly possible and happens often.  A number of brands of toothpaste exist, so to attract customers, advertising is used widely.  The cost of Colgate toothpaste has a slight dependence on competitor’s prices.

            General Motors has long been in the oligopoly known as the automobile industry.  With Ford and Chrysler as well, the three companies share an abundance of market power each, contributing to an atmosphere where a scant number of companies sell the same, if somewhat differentiated, product.   Not enough power, however, to be complete price-setters.    Market entry is heavily blockaded and difficult to overcome.  To appease the volatility of consumer demand, General Motors often users tacit collusion to make fiscal decisions that concur with revenue goals.

            Colgate and General Motors each have interactions unique to their economic system, due to the relative distribution of market power and competitors.  Even so, both have made significant profit through their own unique methodologies, highlighting how having a variety of market structures with one overarching economy is definitely feasible. 

The Shroud over North Korea

           With the death of Kim Jong Il, the former dictator of North Korea, a conspicuous cloud of confusion hovers above the global economy.  Questions concerning whether or not the United States should engage in the “black hole market” have risen incessantly.  Even more, as the succession of Kim Jong-un takes place, uncertainty and ambiguity plagues the lands north of the Korean demilitarized zone.  What’s to happen next?

            Considering the innate enmity Korean officials have towards the United States, fiscal policy does not seem likely to deviate much.  The current communist regime has kept an iron clamp over its own economy, selectively choosing to trade with its exiguous allies.  Moreover, the vast majority of the North Korean population is hardly, if at all, economically involved.  The true monetary power is in the hands of a few, hand-picked city elites, who make decisions on a restricted basis within the city of Pyongyang.   A gargantuan income disparity exists between the top and lower tiers of salary, which inevitably has led to a proliferation of destitution, spurring famine and malnourishment of many.  To say the least, the entire economy is unstable and concentrated narrowly.

            At a quick marginal analysis, the utility of trading with North Korea is minimal.  Given the high elasticity of its market, North Korea could withdraw from trade at the slightest hint of a potential threat.  Careful maneuvering of goods, on top of deft foreign ambassadors, would be needed at all times if the United States should become a trading partner and eliminates current sanctions.    Additionally, the stunted diversity of markets of North Korea hardly holds much benefit.   While an increase of profit for America will most probably occur, its hardly large enough to hold much face value.

            Ultimately, in examination of all external and factors concerning North Korea, trade with North Korea is less than appealing.  A tenuous line of repression is all that barricades the nation from chaos.