Introductory Microeconomics

Firms may avoid the cost of properly The other reason might well be u)hat
disposing waste materials or buying pollution appeared as the expensive “planned obsoles-
treatment equipment. Unfortunately, the cence” the market may not have been able to keep
Magnolia Plant of San Miguel Corporation up with.
situated in Aurora Blvd., Quezon City did not In the early days of Nokia s rising popu-
adapt this idea in the ’90s，resulting in a
larity, the Finland-made instrument, which is
significant spillover costs in the form of
claimed to account for at least 30 percent of total
polluted rivers, smog, and a generally
debased community. employment in that country would introduce a
cellular phone—the latest, it would usually claim
Similarly, unbridled competition may —at a price that hits the roof. For some models
cause profit-seeking firms to brutally exploit
equipped with many features including a camera,
farmlands, forest, and mineral deposits
through the use of the cheapest production the introductory price could be as high
methods. The results would be unproductive as，50,000. About six months later, the price
lands, denuded forests, and polluted mineral would go down by about a half.
camps. The cost to society is the permanent Today, a Nokia cellular phone can sell for
loss of irrepro- ducible natural resources. less than P2,000. Its competitors in the low-end
On the other hand, the production and market, such as Cherry and My Phone, are
consumption of certain goods and services retailed at slightly above 戸 500. The cheapest are
such as anti-TB or polio shots, yield those made in China. They are also the most
widespread satisfaction or benefits to society inefficient and do not last long.
as a whole. This satisfaction is called external
On the other hand, the Nokia that many
or spillover benefits.
people use remains in good working order even
The market system does not provide for after about a decade or so among owners who are
social or public goods. The construction and more concerned with user-friendly mobile than
maintenance of public schools, public high-tech phones with mind- boggling features
hospitals, parks, infrastructure, and similar especially to older people.
projects are done outside the market system.
There is a growing number of users who are so
Despite its other virtues, the competitive price
adept at learning the intricacies and complications
system ignores an important class of goods
of high-tech phones. They get benefits of almost
and services, national defense, flood control
innumerable features and advantages.
programs, and so forth, which can satisfy
consumers but which cannot be priced and The market is continuously “invaded” by
sold through the market system. Samsung, an original competitor of Nokia.
Samsung is not exactly user-friendly or
CASE STUDY inexpensive. But vuhat is claimed to be another
new Samsung model, not yet in the Philippines,
Competitors “Kill” Nokia
by Amado Macasaet can be used to call anybody in the United States
free of charge if the instrument has a Wi-Fi and is
The obvious propensity of younger users for of the latest generation -4G.
high-tech cellular phones may be slowly driving
the higher end market, competition f or
Nokia out of the market. The first is the closure cellular phones is largely among Smart
of its sales and ⑽ at (ilorietta 1 in Paseo de Communications and Globe Telecom. Sun Cellular,
Roxas formerly in the stable of John Gokongwei, Jr. but
St, Makati City. now a part of Smart