The unpredictable trends in the marketplace can be attributed to the fluctuation of commodity prices. Many consumers perceives the unpredictable market trends as an effect of upstream supplying from major suppliers and the downstream supplying from the retailers. Thus, the interplay of major suppliers and retailers of basic commodities affects the supply chain of unregulated pricing that may result price monopoly.
This paper will discuss and analyze the parameters of a study conducted on the issue of the upstream and downstream components of the marketplace that addresses the business organizational theories.Statement of the problemIn ‘The Impact of Incremental Cost Increases in Successive Monopoly with Downstream Promotion’ by Peter Burst, James Fesmire and Michael Truscot (2008) have found that the unpredictable price increases is brought about by a market monopoly in the supply chain. Burst et al. pointed out the underlying factors in “upstream and downstream marketing practices” as a consumer-based issue, wherein the existing governmental “Anti Trust Policy” that regulates competition and promotes fair trade must be enforced. However, the enforcement may only become effective and efficient by complementing with technical operating procedures, in which Burst et al.’s study aims to formulate a “theoretical model” that shall serve as a technical parameter.
Description of procedureFirst, Burst et al. have defined and classified the market situation, such as (1) the size, (2) the types of competitors, and (3) the mode of competition. Second, Burst et al. analyzed the “condition” of commodity prices. Third, they examined the categories of suppliers as the upstream and retailers as the downstream in the intermittent flows of commodity pricing. In addition, the categories of monopoly have been illustrated, as cited the: (1) successive monopoly of manufacturers in direct-retail-outlet, and (2) successive monopoly in downstream retailer partnership (Burst et al., 2008).
Flaws in the procedural designThe overall findings have only depicted on examining the “upstream” and “downstream” categories of manufacturers and retailers’ monopoly. In contrast, the presentation on cost and price index may only be representing a “marginal analysis” but may not substantively represent the beta model. Meaning, the federal government agencies [like the Trade Commerce and Industry] may formulate the same or similar models. In which case, the purpose of Burst et al.’s beta model may be defeated. Generally, the result of Burst et al.’s examination suggests a comprehensive study on related industry sectors.Analysis of the dataMost of data derivatives are from empirical studies, in which test-sampling have not been deliberately obtained [or may only have limited environmental observation].
Thus, an actual “dry-run” or simulation on the price indexing [to monitor price changes] may be recommended. On the other hand, examining the supply chain requires a thorough “market intelligence” framework that could access data for revalidation.Limited and justifiable conclusionBurst et al.’s study aims to explore the impact of “hidden controls” within the supply chain, as the findings focused on downstream and upstream marketing. Despite the limited specifics of the study, the initial empirical data indicates the “vulnerability” of the existing Anti-Trust policy from the “flaws” of the industry and corrupt business practices.
It may be then concluded, Burst et al.’s study could be an “initial exposition” that may need consumers’ advocacy for a policy that empowers total consumerism. Summarily, it may be further concluded that Burst et al.
’s “economic model” acknowledges the rapidly changing archetype of global industry and market trends.ReferenceBurst, P., Fesmire, J. and Truscot, M. (2008). ‘The Impact of Incremental Cost Increases inSuccessive Monopoly with Downstream Promotion’. Journal of Applied Economicsand Policy, Vol. 27, No.
1, pp.33-46. Department of Economics at Western Kentucky University.
Retrieved 08 September 2008 fromhttp://www.wku.edu/jaep/html/documents/JAEPVol2708.pdf.