Asymmetric Ownership Theory

Courses : Intermediate Microeconomics Lecturer : Frischa Adellia Semester : 4th Semester, 2022/2023 Sesion Asymmetric Ownership Theory Asymmetric Ownership Theory is a theory that explains how unequal ownership between producers in an industry can affect market prices and competition among producers. This theory assumes that there are two types of producers in an oligopoly industry: those with access to more advanced technology and those with access to lesser technology. Producers who have access to more advanced technology are perceived to have an advantage in reducing their production costs and are likely to be able to produce higher quality goods. In this theory, producers with more advanced technology are considered to have an advantage over other producers and are able to control market prices. However, other producers also have the advantage of having their own market, such as a larger or smaller market or a market with different demands. This asymmetric ownership in terms of technology can affect the behavior of producers in setting prices and determining their production levels. In some cases, producers with more advanced technology may enter the market at a lower price to beat their competitors and then raise prices when the competitors have exited the market. In other cases, producers with lower technology may enter the market at lower prices to maintain their market share, while producers with more advanced technology may reduce production to keep prices high. This causes prices to stabilize in the long run and reduces competition among producers. Theory of Asymmetric Ownership has several policy implications, especially in terms of price regulation and monitoring of ownership in an industry. Some examples of policies that can be implemented are the provision of subsidies for technology development for producers who have limited access to technology, and strict monitoring of price behavior and production of producers with more advanced technology. Asymmetric Ownership Theory is a theory that explains the dynamics of the oligopoly market. This theory focuses on the influence of asset ownership on a company's business strategy and competition in an oligopoly market. According to this theory, companies that have greater asset ownership than their competitors tend to have an advantage over the competition. Ownership of greater assets can give companies control over critical resources needed to produce products or services, such as technology, natural resources, or distribution channels. However, this theory also recognizes that asymmetric ownership can result in behavior that is detrimental to consumers and the market as a whole. Dominant asset owners can use their position to limit competition or influence product prices, resulting in greater profits for the company but to the detriment of consumers. In this theory, the government is seen as a counterweight in an oligopoly market, with its role in preventing monopolistic or oligopoly practices that are detrimental to consumers and ensuring fair competition in the market. Asymmetric Ownership Theory is a theory in industrial economics which states that different asset ownership among companies in an industry can influence the behavior and business strategy adopted by the company. Within an industry, there are significant differences in asset ownership among the companies operating within it. For example, in the aviation industry, some companies have assets in the form of extensive flight route networks, while others have assets in the form of modern and efficient aircraft fleets. This difference in asset ownership can affect a company's ability to compete and influence the strategy they take. Theory of Asymmetric Ownership focuses on how differences in asset ownership can affect the behavior and business strategies of companies in the industry. This theory states that companies with strong asset ownership tend to adopt a different business strategy than companies with weak asset ownership. For example, a company that has an extensive network of airline routes can take advantage of this advantage by offering more routes and different flight schedules at lower prices, while a company that has a modern and efficient fleet of aircraft can adopt a strategy to reduce their operating costs by offering cheaper price. In an industry dominated by firms with strong asset holdings, there is a risk of oligopoly, whereby firms can leverage their market power to limit competition and generate larger profits. Therefore, strict regulation is needed to prevent this oligopoly risk. Some features of asymmetric policy theory include: 1. There are two types of companies, namely large companies that are subject to regulation and small companies that are not subject to regulation. 2. Large companies have a competitive advantage in the form of economies of scale that allow them to charge lower prices and monopolize the market. 3. Regulations are made to protect consumers and reduce the market power of large companies that can harm consumers. 4. Regulation has a side effect in the form of costs that must be borne by large companies, so that it can reduce the investment and innovation made by these companies. 5. Smaller firms can take advantage of regulatory imbalances by offering higher prices and making larger profits.