Volume 1, No. 3 (Fall 1998) Why do business firms exist? Do firms substitute for the market or complement the market? Why do firms buy some inputs but make others?These are basic economic questions...
Don Mathews
Don Mathews teaches economics at Coastal Georgia Community College
Latest work
Contrary to the many articles and studies, the price mechanism in the nursing market is not malfunctioning. It is working in textbook-like fashion. The increasing demand for nurses is driving nursing compensation up, which in turn is bringing more nurses into the market. Such is not the stuff of shortages but of market prices coordinating the allocation of scarce resources exceptionally well — and in reality, not just theory.
Entrepreneurs are not easily thwarted by government intervention, writes Don Mathews. Sometimes entrepreneurs respond so creatively that they render the interventionist measure almost meaningless. A classic example of an entrepreneurial response to state-sponsored plunder is the case of the US anti-dumping tariff on imported shrimp. Total shrimp imports to the United States have increased by 14 percent since the tariff was imposed, while domestic shrimp prices have decreased by 9 percent. Also, US shrimp imports from the six countries targeted by the tariff have increased by almost 20 percent since the tariff was imposed.