This paper addresses three applied microeconomic topics in short-answer format. The first section examines how Nordstrom differentiates itself through superior customer service and employee compensation strategies that foster loyalty among both customers and sales staff. The second section analyzes the supply, demand, and market structure of nuclear energy, including cross-price elasticities, fixed costs, and the rationale for a regulated monopoly model. The third section explores how social media has transformed the entrepreneurial landscape by lowering barriers to entry, expanding marketing reach, and enabling new financing mechanisms such as crowdfunding and angel investor outreach.
Nordstrom is a service-driven company, and this is what helps it differentiate itself from other similar retailers. The company is one of many department stores in the United States that typically anchor malls and sometimes downtown shopping districts. Nordstrom's target market is similar to that of many other such retailers, yet it seeks to differentiate itself by offering a superior level of customer service that creates a better customer experience and cultivates a higher degree of brand loyalty than competing department stores are typically able to achieve.
Nordstrom salespeople are well positioned to remain with the company because they are treated well. First, they have little to do but serve the customer, and the company supports them in their customer service initiatives. Furthermore, the sales staff receives pay and benefits that are above average for their industry. This is because Nordstrom wants to attract the best people in the profession, as exceptional service is central to the company's success. By offering an attractive package of pay and benefits alongside a positive working environment, the company provides a higher level of utility to its sales staff than its competitors do, and this engenders a meaningful degree of loyalty on the part of the staff.
Nuclear energy carries a high cost of investment and high ongoing fixed costs. There is also considerable risk associated with it. As such, nuclear energy is generally considered a substitute for more conventional forms of energy — in particular, coal or hydroelectric power. Cross-price elasticities are therefore a major factor in the demand curve for nuclear energy. The higher the price of those other energy sources relative to nuclear, the greater the demand for nuclear power will be. In countries where extra capacity for nuclear power already exists, the demand curve looks somewhat different. Once capacity has been built, the demand for nuclear energy resembles the demand for any household or industrial energy. By and large, buyers are not especially concerned about where their energy comes from, as long as the lights turn on when the switch is flicked. In that sense, where capacity still exists, the demand for nuclear energy mirrors the general demand for energy. If the consumer has a choice of energy source, demand for nuclear energy will be determined by its price relative to alternatives.
The supply curve for nuclear energy must account for its high fixed costs, the risks involved, and the availability of other energy sources. Relative to coal, nuclear energy is considered safe and clean. This means that in some markets there is strong demand for nuclear energy because it is perceived as better for the environment — Western Europe being a notable example. Nuclear energy is not favored relative to hydroelectric power or other sources perceived as clean, readily available, and lower cost. Consequently, nuclear reactors are not found in places with a surplus of hydroelectric or geothermal energy, such as British Columbia or Iceland, but are present in places like Germany or Israel that lack such alternatives.
The nuclear energy industry will always tend toward a monopoly structure. It is an industry that requires very heavy regulation for several reasons. First, the technology is a matter of national security. Second, the fixed costs of production are extremely high — firms cannot build reactors unless they can guarantee that they will sell all the power they generate. Third, regulation must be very strict because the consequences of any serious incident far exceed those of virtually any other industry, which makes a strong public-interest case for a monopoly — most likely a government-operated one — to oversee the production of nuclear power.
"Lower barriers to entry increase competition and niches"
"Crowdfunding and angel investors via social networks"
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