I never studied economics, but find it very interesting. A blog I read called The Angry Economist explains topics really well and a recent post about The Secrets of The Economists I found really interesting. Especially when combined with ideas posted in Eric Sink's excellent The Game is Afoot.
The gist that I got from it goes something like this:
An entrepreneur may make a profit from executing an idea (Eric's First Mover Advantage).
Profits are the reward.
If he borrows money to achieve the plan, this must be repaid (plus some) this costs him money.
Over time, if successful, the original idea will attract competition.
A crowded market inevitably leads to competitive pricing which erodes profit margins (good for consumers)
The conclusion - entrepreneurs should maximise profits in the short term whilst they have competitive ad.
The gist that I got from it goes something like this:
An entrepreneur may make a profit from executing an idea (Eric's First Mover Advantage).
Profits are the reward.
If he borrows money to achieve the plan, this must be repaid (plus some) this costs him money.
Over time, if successful, the original idea will attract competition.
A crowded market inevitably leads to competitive pricing which erodes profit margins (good for consumers)
The conclusion - entrepreneurs should maximise profits in the short term whilst they have competitive ad.
1 comment,
Business, Tuesday, June 6, 2006 23:58
