An explanation of the profitability and market power of marginalized microenterprises
Journal: JOURNAL OF SOCIAL SCIENCES RESEARCH (Vol.10, No. 1)Publication Date: 2016-03-15
Authors : Natanael Ramírez; Alejandro Mungaray; José G. Aguilar; Ramón Inzunza;
Page : 1987-1994
Keywords : Microenterprises; market power; marginalization; Lerner’s Index.;
Abstract
This paper analyzes the behavior of marginalized microenterprises under an imperfect competition framework, where said economic units are capable of fixing a price above their marginal costs which allows them to survive and even be profitable despite their typical operating conditions. To prove this, we use an econometric model that considers the Lerner index as a variable dependent on a set of qualitative variables previously classified in accordance to their area of influence. We conclude that these microenterprises are capable of being profitable and operate with market power through their advertising and sales strategies and the flexibility in their productive process. In any case the pricing power is highly influenced by the socioeconomic conditions of the market in which it operates.
Other Latest Articles
- 18TH CENTURY URBANIZATION IN SOUTH INDIA AND TRANSFORMATION INTO BRITISH IMPERIAL ARCHITECTURE WITH SPECIAL FOCUS ON URBAN SPACES OF BANGALORE
- Rhetoric of Political Repression in Nigerian Newspaper Reports: The Critical Discourse Analysis Perspective
- Role of the Shea Industry in the Socio-economic Lives of Women in the West Mamprusi District of Northern Ghana
- The combination of turnaround management, blue ocean strategies and disruptive innovation as tools in guiding companies in overcoming their recession problems and develop a long- term healthy economic performance
- THE EFFECT OF INTEREST AND FOREIGN EXHANGE RATE ON MACROECONOMIC PERFORMANCE AND BANKING SECTOR
Last modified: 2016-07-05 19:30:06