Portfolio Commentary

Economics Commentary Number: HL Number 1

Title Of Extract: “Criss-crossed capitalism”

Source Of Extract: The Economist

Date Of Extract: 6/11/2008

Word Count: 713

Date The Commentary Was Written: 19/11/2008

Sections Of The Syllabus To Which The Commentary Relates: 2.1, 2.2, 2.3ii

Candidates Name: Esteban Gutierrez Aparicio

The collusive market structure that the Japanese traditional industry has traced over previous years has increasingly become to fail. The tendency of companies abandoning cross-shareholdings has generated a in deep economic loss resulting from a reduce in the total revenue of corporations in the country. The attempt of industries such as steel, paper and energy as well as car making companies and electronic firms to consolidate economic partnership through means of oligopoly, has decreased deliberately from 50% of the market values to 20% over the last 17 years.  

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The benefits of share holding companies were determined in preceding times to maximize profits by jointly agreeing in a fixed price which will avoid “price wars” and therefore substantial revenues. Also assuming the interdependent behaviors, cross-shareholding companies act together to establish high barriers of entry to the industry in order to preserve ascendancy and evade competitiveness to have a high indices of demand. As the extract mentions, there is a bought share between companies to prevent the overhaul of others and to regulate the number of firms within the market as it happened with Mitsubishi when 11 other companies ...

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