Let’s Talk Money
March 12, 2012
Let’s Talk Money
The retail conglomerate Wal-Mart current CEO is Mr. Michael Duke. Mr. Duke has agreed to meet with the Talk show host Steve Harvey and President Barrack Obama. During the session the discussion will center around Wal-Mart’s impact on today’s economy, and the government’s role in ensuring fairness.
(Host)-First, we would like to thank the President of the United States for taking time out of his busy schedule to appear on “Let’s Talk Money”.
(President Obama)- Your are welcome, after all it is a election year (said jokingly)
(Host)- Next, we would like to thank Mr. Duke for taking time to meet ...view middle of the document...
Therefore, we removed ourselves from that part of the business. We also sold our portion of the market to Netflix. In turn Netflix would no longer sell DVDs but rather promote Wal-Mart’s sales.
(Steve)-Well Prez, how might the government react to assure fair competition within the company’s given market?
(President Obama)-The lawsuit is based on Section 1 of the Sherman Act, which prohibits agreements and conspiracies in restraint of trade. It is important to understand that a company doesn’t have to actually create a monopoly. The unique thing about a monopoly is that a company does not have to conspire with anyone. The question then becomes, did Wal-Mart and Netflix make an agreement that basically eliminated the competition? We must ensure that all businesses stay in compliance.
(Steve)-OK. Next question-Mike, In what ways might Wal-Mart create a benefit externality?
(Mr. Duke)-Wal-Mart as a company has brought more business, jobs and visitors to areas that once was hit hard by the present state of the economy. This can be viewed as positive externalities, because it creates thousands of potential new consumers for surrounding businesses. These consumers not only come here to visit Wal-Mart but stop at the local mall, restaurants and other stores in the community. The jobs created by Wal-Mart tend to be those less skilled work forces. To be employed by Wal-Mart afford those who normally would not be able to afford medical care the chance to have it. Wal-Mart also puts money back in the community in the form of scholarships.
(Steve)- Good answer. In what ways might it create a cost externality?
(Mr. Duke)-Wal-Mart is consistently criticized for having the opposite affect when it comes to externalities in a community. It is commonly known as the “Wal-Mart Effect.” Mom and pop business are unable to compete with Wal-Mart’s low prices and eventually have to close their business. This also affects the local attorneys and accountants that represent these businesses.
(Steve)-How might the government respond to the externalities created by Wal-Mart?
(President Obama)-Steve, though some view the externalities Wal-Mart bought forth as negative, however if we could get other companies to create as many jobs and positive opportunities as Wal-Mart the road to recovery will be short traveled.
(Steve)-What is the importance of the government as a buyer in a market economy? Explain from both a governmental and a business perspective.
(Mr. Duke)- Let's take the example of a company that manufactures paper products -- from writing paper to cardboard boxes -- at a factory location on a river. The problem is that, as a by-product of its manufacturing operations, the factory dumps chemical pollutants into the river. But no single person or entity owns the river water, so there is no one to force the company to stop polluting. Moreover, since cleaning up the river would cost money, the company can sell its paper products more cheaply...