Business Laws

Paper Summary:

This paper states that artificially adjusting wages above market rates set by the supply and demand of labor increases unemployment because, when businesses cannot pass along the higher labor costs, they often eliminate workers though decreased production or by substituting them with more efficient technologies. The author points out that minimum wage laws are less effective at reducing social exclusion and are more damaging to businesses than other alternatives such as training programs and the earned income tax credit. The paper further relates that many of the new industries in our economy, such as the software industry, Internet-based businesses, communications services and equipment and biotechnology, many problems arise when applying anti-trust laws, , including network effects and low marginal costs and high fixed costs.

Table of Contents:
Minimum Wage Laws
Anti-trust - Microsoft

From the Paper:

"Firms in new economy industries must invest great sums of money to develop their products, either in upfront research and development or in physical or virtual networks to create and deliver products. Microsoft is a natural monopoly business. Initially, it is expensive to produce software, but it is very cheap to make copies. The marginal cost of Microsoft's software is virtually zero, so average total costs decline with each copy sold. As the company established its lead, it becomes more difficult for competitors to compete against it with lower prices, since their own costs have to be recouped with fewer sales."

Sample of Sources Used:

• Kibbe, M.B. The minimum wage: Washingtons perennial myth. Cato Policy Analysis No. 106. http://www.cato.org/pubs/pas/pa106.html
• Minimum wage. Wikipedia. http://en.wikipedia.org/wiki/Minimum_wage#Costs
• Spaulding. W.C. Predatory pricing - Microsoft's modus operandi. http://thismatter.com/Articles/Microsoft.htm
• Stenborg, M. Do we need new competition policy in the "new economy"? http://www.etla.fi/files/921_FES_02_2_competition_policy.pdf

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