Efficient customer and inefficient markets
The Wall Street Journal reports that concert goers are more prudent when purchasing tickets. Compared to the previous generations, they delay the dates to buy tickets closer to closer to the concert date. That give them more time to look around the Internet to find better deals. That sounds a good news on the customer stand point so that they save more on concert expanding. But it certainly is not as good on the artist side: the concert sales has declined 17% compared one year ago. Artists are struggling to find ways to spike up the market.
The Perfect Market theory says market participants will find ways to excel in intrinsically inefficient markets. Although this theory has been challenged by many investor, it seems it works perfectly in this context. In this case, the incentive of having cheap tickets is high, may be the uncertain economical condition plays a role. However, as loud as the challengers sound, plenty of real life examples contradict:
For companies that still are struggling on revenue, according to the theory, they should streamline their management and push out more competent products. But that is not the case. Sluggish product development and chaotic management wasted lots of opportunities to make productivity efficient. To an extreme, external pressure either make or break some institutions. For those don't need to worry about revenue in near term, it is the same story. One news said that a university research on inserting a micro camera into a tube to detect inner organ got $1.5M funding from the government. Is it worth for such spending? When facing deadlines, companies usually would just double the man count, which caused more expenses.
In all, the theory just doesn't work: the markets can't adjust themselves, either they don't know how or don't want to. This free market theory is good for academic study but in real life, we need some management (hopefully qualified) to right the ship.
This is a mini snapshot of the view between Adam Smith vs. John Keynes
The Perfect Market theory says market participants will find ways to excel in intrinsically inefficient markets. Although this theory has been challenged by many investor, it seems it works perfectly in this context. In this case, the incentive of having cheap tickets is high, may be the uncertain economical condition plays a role. However, as loud as the challengers sound, plenty of real life examples contradict:
For companies that still are struggling on revenue, according to the theory, they should streamline their management and push out more competent products. But that is not the case. Sluggish product development and chaotic management wasted lots of opportunities to make productivity efficient. To an extreme, external pressure either make or break some institutions. For those don't need to worry about revenue in near term, it is the same story. One news said that a university research on inserting a micro camera into a tube to detect inner organ got $1.5M funding from the government. Is it worth for such spending? When facing deadlines, companies usually would just double the man count, which caused more expenses.
In all, the theory just doesn't work: the markets can't adjust themselves, either they don't know how or don't want to. This free market theory is good for academic study but in real life, we need some management (hopefully qualified) to right the ship.
This is a mini snapshot of the view between Adam Smith vs. John Keynes
posted by Intl.investment.services at
9:08 AM
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