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Efficient companies require less resources to produce the same amount of goods and services. The resources that are not used to produce goods and services can b
by rvern 9y ago
Efficient companies require less resources to produce the same amount of goods and services. The resources that are not used to produce goods and services can be used to do other things. This is true even if the company uses the savings to realize higher margins instead of lowering prices.
More efficiency increases purchasing power (or reduces working hours or resource usage, at least) even if there is no competition. Competition just gives an incentive to become more efficient.
- ska 9y agoThat's the toy model presented in introductory courses, but we have good of evidence that it isn't that simple. Or at least that we don't understand the dynamics very well. The resources used for other things do not necessarily help that much globally, they can just accumulate in less useful ways (i.e. trickle down economics is mostly wishful thinking) The compelling impact of growth pointed out earlier (over centuries) was largely driven by the breaking of monopolies and increase in market access, as well as social change allowing more efficient allocation of resources.
- valuearb 9y agoTrickle down economics is a political slur, not an economic principle.