Comments on: Beijing caves in to the indisputable power of the MARKET! http://welkerswikinomics.com/blog/2007/11/01/beijing-caves-in-to-the-irrevocable-power-of-the-market/ for students and teachers of AP and IB Economics Wed, 07 Jan 2009 08:11:15 +0000 http://wordpress.org/?v=2.7 hourly 1 By: Helen http://welkerswikinomics.com/blog/2007/11/01/beijing-caves-in-to-the-irrevocable-power-of-the-market/comment-page-1/#comment-3217 Helen Sat, 10 Nov 2007 16:05:55 +0000 http://welkerswikinomics.com/blog/2007/11/01/beijing-caves-in-to-the-irrevocable-power-of-the-market/#comment-3217 I have a few questions. What caused the rising costs for Chinese oil refiners? Is the P = MR rule a unique characteristic pertaining only to perfect competition? Because if that is the case, then the oil industry in China would be perfectly competitive as the blog post stated that P = MR in this industry. But wouldn't it be more like an oligopoly? Because there are only so many oil suppliers (unlike the VERY large number of small firms in perfect competition) differentiating their product through their brands. From where I stand, I see the Chinese government facing a lose-lose situation. If they don't establish a price ceiling, the increase in the price of oil would contribute to China's inflation, which is bad. If they do establish a price ceiling, there is then a shortage, which is also bad due to the efficiency loss. I have a few questions. What caused the rising costs for Chinese oil refiners? Is the P = MR rule a unique characteristic pertaining only to perfect competition? Because if that is the case, then the oil industry in China would be perfectly competitive as the blog post stated that P = MR in this industry. But wouldn’t it be more like an oligopoly? Because there are only so many oil suppliers (unlike the VERY large number of small firms in perfect competition) differentiating their product through their brands.

From where I stand, I see the Chinese government facing a lose-lose situation. If they don’t establish a price ceiling, the increase in the price of oil would contribute to China’s inflation, which is bad. If they do establish a price ceiling, there is then a shortage, which is also bad due to the efficiency loss.

]]> By: Welker’s Wikinomics Blog - for students and teachers of AP and IB Economics » Quit cutting chemistry class! http://welkerswikinomics.com/blog/2007/11/01/beijing-caves-in-to-the-irrevocable-power-of-the-market/comment-page-1/#comment-3187 Welker’s Wikinomics Blog - for students and teachers of AP and IB Economics » Quit cutting chemistry class! Sun, 04 Nov 2007 12:48:48 +0000 http://welkerswikinomics.com/blog/2007/11/01/beijing-caves-in-to-the-irrevocable-power-of-the-market/#comment-3187 [...] Beijing caves in to the indisputable power of the MARKET! [...] [...] Beijing caves in to the indisputable power of the MARKET! [...]

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