REVIEWER FOR MANAGERIAL ECONOMIC

PRICING STRATEGIES
A pricing strategy is a model or method used to establish the best price for a product or service.
It helps you choose prices to maximize profits and shareholder value while considering
consumer and market demand.
Pricing strategies take into account many of your business factors, like revenue goals,
marketing objectives, target audience, brand positioning and product attributes
They’re also influenced by external factors like consumer demand, competitor pricing, and
overall market and economic trends.
The best pricingstrategy maximizes your profit and revenue.
Price elasticity of demand is used to determine how a change in price affects consumer
demand. If consumers still purchase a product despite a price increase (such as cigarettes and
fuel) that product is considered inelastic. On the other hand, elastic products suffer from
pricing fluctuations (such as cable TV and movie tickets).
Elasticity of formula: % Change in Quantity ÷ % Change in Price = Price Elasticity of Demand.

TYPE OF PRICING STRATEGIES

Pricing a product is one of the most important aspects of your marketing strategy
Competition-based pricing is also known as competitive pricing or competitor-based pricing.
This pricing strategy focuses on the existing market rate (or going rate) for a company’s product
or service; it doesn’t take into account the cost of their product or consumer demand. Instead,
a competition-based pricing strategy uses the competitors’ prices as a benchmark.
A cost-plus pricing strategy focuses solely on the cost of producing your product or service, or
your COGS (COST OF GOOD SOLD). It’s also known as markup pricing since businesses who use
this strategy “mark up” their products based on how much they’d like to profit.
Dynamic pricing is also known as surge pricing, demand pricing, or time- based pricing. It’s a
flexible pricing strategy where prices fluctuate based on market and customer demand.
Freemium Pricing Strategy is combination of the words “free” and “premium,” freemium pricing
is when companies offer a basic version of their product hoping that users will eventually pay
to upgrade or access more features.
Software as a Service A SaaS company is a company that hosts an application and makes it
available to customers over the internet.
A high-low pricing strategy is when a company initially sells a product at a high price but lowers
that price when the product drops in novelty or relevance. Discounts, clearance sections, and
year-end sales are examples of high-low pricing in action
Hourly pricing, also known as rate-based pricing, is commonly used by consultants, freelancers,
contractors, and other individuals or laborers who provide business services. Hourly pricing is
 essentially trading time for money. Some clients are hesitant to honor this pricing strategy as it
can reward labor instead of efficiency.
A skimming pricing strategy is when companies charge the highest possible price for a new
product and then lower the price over time as the product becomes less and less popular
Penetration Pricing is setting a low price to enter a competitive market and raising it later.

Pricing Models Based on Industry or Business

Product Pricing Model -A product pricing strategy should consider these costs and set a price
that maximizes profit, supports research and development, and stands up against competitors.
Digital Product Pricing Model - Digital products, like software, online courses, and digital books,
require a different approach to pricing because there’s no tangible offering or unit economics
(production cost) involved. Instead, prices should reflect your brand, industry, and overall value
of your product.
Restaurant Pricing Model - Restaurant pricing is unique in that physical costs, overhead costs,
and service costs are all involved.
Product Pricing Model -A product pricing strategy should consider these costs and set a price
that maximizes profit, supports research and development, and stands up against competitors.
Digital Product Pricing Model - Digital products, like software, online courses, and digital books,
require a different approach to pricing because there’s no tangible offering or unit economics
(production cost) involved. Instead, prices should reflect your brand, industry, and overall value
of your product.
Restaurant Pricing Model - Restaurant pricing is unique in that physical costs, overhead costs,
and service costs are all involved.
Product Pricing Model -A product pricing strategy should consider these costs and set a price
that maximizes profit, supports research and development, and stands up against competitors.
Digital Product Pricing Model - Digital products, like software, online courses, and digital books,
require a different approach to pricing because there’s no tangible offering or unit economics
(production cost) involved. Instead, prices should reflect your brand, industry, and overall value
of your product.
Restaurant Pricing Model - Restaurant pricing is unique in that physical costs, overhead costs,
and service costs are all involved.
Product Pricing Model -A product pricing strategy should consider these costs and set a price
that maximizes profit, supports research and development, and stands up against competitors.
Digital Product Pricing Model - Digital products, like software, online courses, and digital books,
require a different approach to pricing because there’s no tangible offering or unit economics
(production cost) involved. Instead, prices should reflect your brand, industry, and overall value
of your product.
Restaurant Pricing Model - Restaurant pricing is unique in that physical costs, overhead costs,
and service costs are all involved.
Product Pricing Model -A product pricing strategy should consider these costs and set a price
that maximizes profit, supports research and development, and stands up against competitors.
Digital Product Pricing Model - Digital products, like software, online courses, and digital books,
require a different approach to pricing because there’s no tangible offering or unit economics
(production cost) involved. Instead, prices should reflect your brand, industry, and overall value
of your product.
Restaurant Pricing Model - Restaurant pricing is unique in that physical costs, overhead costs,
and service costs are all involved.
PRICE DISCRIMINATION- refers to the charging of different prices for the different quantities of
product, at different times, to different customer groups in different markets, when these price
differences are not justified by cost differences. There are three types of price discrimation:
First, Second and Third Degree.
First Degree Price Discrimination- invovles selling each unit product separately and charging the
highest price possible for each unit sold. By doing so, the total revenue and profits from the sale
of a particular quantity of the product.
Second Degree Price Discrimation- refers to the charging of a uniform price per unit for a
specific quantity or block of the product sold to each customer, a lower price per unit for an
additonal batch or block of the product and so on. By doing so, the firm will extract part, but not
all, of the consumers' surplus.
Third Degree Price Discrimation- refers to the charging of different prices for the same product
in different markets until the marginal revenue of the last unit of the product sold in each
market equals the marginal cost of producing the product.
Regulation and Antitrust: The Role of Government in the Economy

economic theory of regulation (sometimes called the “capture theory of regulation”) expounded
by Stigler and others, regulation is the result of pressure-group action and results in laws and
policies to support business and to protect consumers, workers, and the environment. In this
section, we examine regulations that shelter firms from competition and protect consumers
against unfair business practices, workers against hazardous working conditions, and the
environment against pollution and degradation.

Government Regulations That Restrict Competition

Hundreds of pressure groups from business, agriculture, trades, and the professions have been
successful in having government (local, state, and federal) adopt many regulations which, in
effect (though perhaps not always and entirely by intent), restrict competition and create
artificial market power. These regulations include licensing, patents, restrictions on price
competition, and restrictions on the free flow of international trade.
Licensing is usually justified to ensure a minimum degree of competence and to protect the
public against fraud and harm in cases in which it is difficult for the public to gather independent
information about the quality of the product or service, and the potential for harm is quite large.
Inevitably, however, licensing becomes a method to restrict entry into the business, profession,
or trade and to restrict competition. Sometimes licensing seems to serve no other function than
to restrict entry and competition.
. A patent is the right granted by the federal government to an inventor for the exclusive use of
the invention for a period of 17 years. The patent holder (individual or firm) can use the patent
directly or grant a license for others to use the invention in exchange for royalty payments.
There are also many restrictions on price competition that are the direct result of government
action. These include government-guaranteed parity prices in agriculture, trucking freight rates
and airline fares before deregulation, ocean shipping rates, and many others.
Agriculture has been aided with price supports and many other programs costing billions of
dollars per year to consumers and tax payers.

Government Regulations to Protect Consumers, Workers, and the Environment

Government also intervenes in the economy in order to protect consumers against unfair
business practices, workers against hazardous working conditions, and the environment against
pollution and degradation.
The first type of policy designed to protect consumers is that of requiring truthful disclosure and
forbidding the misrepresentation of products. The Food and Drug Act of 1906 forbids
adulteration and mislabelling of foods and drugs sold in interstate commerce. The act was
strengthened to also include cosmetics in 1938.
The Federal Trade Commission Act of 1914 was designed to protect firms against unfair
methods of competition based on product misrepresentation, but it also, and at the same time,
 provided significant protection to consumers. Among the practices that were forbidden by the
act were misrepresenting (1) the price of products (2) the origin of products (3) the usefulness of
the product (such as claiming, for example, that a product can prevent arthritis when it does
not); and (4) the quality of the product (such as claiming that glass is crystal).
A second type of regulation designed to protect consumers is the truth-in-lending law. This is
based on the Consumer Credit Protection Act of 1968, which requires lenders to make complete
and accurate disclosure, in easy-to-understand language, of the precise terms of credit
particularly the absolute amount of interest and other credit charges and the annual interest
rate on the unpaid balance.
A third type of consumer protection is provided by the Consumer Product Safety Commission,
which was established in 1972 to (1) protect consumers against risk and injury associated with
the use of some products, (2) provide information to consumers for comparing and evaluating
the relative safety in the use of various products, and (3) develop uniform safety standards for
many products
Other laws designed to protect consumers are (1) the Fair Credit Reporting Act of 1971, which
grants credit applicants the right to examine their credit file and to know the reason for the
rejection of a credit application, and forbidding credit discrimination based on race, religion, sex,
marital status, or age; (2) the Warranty Act of 1975, which requires warranties to be written in
plain English, indicate which parts are covered, and explain how the consumer can exercise the
rights granted by the warranty; (3) the National Highway Traffic Safety Administration (NHTSA),
which imposes safety standards on highway traffic; and (4) laws that require mail-order houses
to fill orders within 30 days or refund the customer’s money
laws and regulations protecting workers are (1) the Occupational Safety and Health
Administration (OSHA), which specifies safety standards for noxious gases and chemicals, noise
levels, and other hazards; (2) the Equal Employment Opportunity Commission (EEOC), which
regulates business hiring and firing practices; and (3) minimum wage laws, which put a floor on
wages that business can pay to hired labor.

EXTERNALITIES AND REGULATION

the public interest theory of regulation, government regulation is undertaken to
overcome market failures, so as to ensure that the economic system operates in a
manner consistent with the public interest. Market failures arise because of externalities
and from the monopoly power that exists in imperfectly competitive markets. In this
section, we examine externalities and ways to overcome them. Monopoly power, as
another type of market failure, is examined in the rest of this chapter.

The Meaning and Importance of Externalities

The production and consumption of some products may give rise to some harmful or
beneficial side effects that are borne by firms of people not directly involved in the
production or consumption of the product. These are called externalities.
 External diseconomies of production are uncompensated costs imposed on some firms
by the expansion of output by other firms. For example, the increased discharge of
waste materials by some firms along a waterway may result in antipollution legislation
that increases the cost of disposing of waste materials for all firms in the area.
External economies of production are uncompensated benefits conferred on some firms
by the expansion of output by other firms. An example of this arises when some firms
train workers and some of these workers go to work for other firms (which, therefore,
save on training costs).
External diseconomies of consumption are uncompensated costs imposed on some
individuals by the consumption expenditures of other individuals. For example, smoking
in a public place has a harmful effect (i.e., imposes a cost) on nonsmokers in the place.
external economies of consumption are uncompensated benefits conferred on some
individuals by the increased consumption of a product by other individuals.
Policies to Deal with Externalities One way that a market failure or inefficiency resulting
from external economies can be overcome is by government prohibition or regulation.
By forbidding an activity that gives rise to an external diseconomy, the external
diseconomy can be avoided. For example, by prohibiting the use of automobiles, auto
emissions can be eliminated.
In some industries, economies of scale operate (i.e., the long-run average cost curve
may fall) continuously as output expands, so that a single firm could supply the entire
market more effectively than any number of smaller firms. Such a large firm supplying
the entire market is called a natural monopoly.
Monopoly in this case is the natural result of a larger firm having lower costs per unit
than smaller firms and being able to drive the latter out of business. Examples of natural
monopolies are public utilities (electrical, gas, water, and local transportation
companies).
Regulation can also lead to inefficiencies.
Overinvestment or underinvestment in plant and equipment resulting from the wrong
public utility rates being set is known as the Averch-Johnson or A-J effect (from Harvey
Averch and Leland Johnson, who first identified this problem) and can lead to large
ineffeciencies. And yet, it is difficult indeed for regulatory commissions to come up with
correct utility raets in view of the difficulty of valuing the fixed assets of public utilities
and because of the long planning ad gestation period of public utility investment
projects.

ANTITRUST: GOVERNMENT REGULATION OF MARKET STRUCTURE AND CONDUCT

In this section we summarize the provisions of the most important antitrust laws. These are the
Sherman Act (1890), the Clayton Act (1914), the Federal Trade Commission Act (1914), the
Robinson-Patman Act (1936), the Wheeler-Lea Act (1938), and the Celler-Kefauver Antimerger
Act (1950).
Sherman Act (1890) This is the first federal antitrust law. Sections 1 and 2 state:
1. Every contract, combination in the form of a trust or otherwise, or conspiracy, in restraint of
trade or commerce among the several states, and with foreign nations is hereby declared to be
illegal.
2. Every person who shall monopolize, or combine or conspire with any other person or persons,
to monopolize any part of the trade or commerce among the several states, or with foreign
nations, shall be deemed guilty of a misdemeanour.
Clayton Act (1914) This act listed four types of unfair competition that were illegal: price
discrimination, exclusive and trying contracts, intercorporate stock holdings, and interlocking
directorates.
1. Section 2 of the act makes it illegal for sellers to discriminate in price among buyers, when
such discrimination has the effect of substantially lessening competition or tends to create a
monopoly. Price discrimination is otherwise permissible when it is based on differences in grade,
quality or quantities sold, or selling or transportation costs and when lower prices are offered in
good faith to meet competition.
2. Section 3 of the act makes it illegal for sellers to lease, sell, or contract for the sale of a
commodity on the condition that the lessee or buyer does not purchase, lease, or deal in the
commodity of a competitor, if such an exclusive or trying contract substantially lessens
competition or trends to create a monopoly.
3. Section 7 of the act makes it illegal for a corporation engaged in commerce to acquire the
stocks of a competing corporation or the stocks of two or more corporations that compete with
one another is such intercorporate stock holdings substantially lessen competition or tend to
create a monopoly.
4. Section 8 of the act makes it illegal for the same individual to be on the board of directors of
two or more corporations (interlocking directorate) if the corporations are competitive and if
any has capital, surplus, or undivided profits in excess of $1 million.
Federal Trade Commission Act (1914) This act supplemented the Clayton Act and simply stated
that “unfair methods of competition were unlawful.” The act also established the Federal Trade
Commission (FTC) to prosecute violators of the antitrust laws and to protect the public against
false and misleading advertisements (see Section 12-1).
Robinson-Patman Act (1936) As pointed out in Section 12-1, this act, passed to amend the
Clayton Act, made it illegal to sell more cheaply to one buyer or in one market than to others or
sell at “unreasonably low prices” with the intent of destroying competition or eliminating a
competitor. The act sought to protect small retailers (primarily independent grocery stores and
drugstores) from price competition from chain-store retailers, based on the latter’s ability to
obtain lower prices and brokerage concession fees on bulk purchases from suppliers.
Wheeler-Lea Act (1938) As pointed out in Section 12-1, this act amended the Federal Trade
Commission Act and forbade false or deceptive advertisement of foods, drugs, corrective
devices, and cosmetics entering interstate commerce. Its main purpose was to protect
consumers against false or deceptive advertisement.
Celler-Kefauver Antimerger Act (1950) This act closed a loophole in Section 7 of the Clayton Act,
which made it illegal to acquire the stock of a competing corporation but allowed the purchase
of the assets of a competing corporation. The Celler-Kefauver Antimerger Act closed this
loophole by making it illegal to purchase not only the stock but also the assets of a competing
corporation if such a purchase substantially lessens competition or trends to create a monopoly
 the act forbids all types of mergers: horizontal (i.e., firms producing the same type of products,
such as steel mills), vertical (firms at various stages of production, such as steel mills and coal
mines), and conglomerate (firms in unrelated product lines, such as breakfast cereals and
magazines) if their effect lessens competition substantially or tends to create a monopoly.

ENFORCEMENT OF ANTITRUST LAWS AND THE DEREGULATION MOVEMENT

Enforcement of Antitrust Laws: Some General Observations
Enforcement of Antitrust Laws: Structure
Enforcement of Antitrust Laws: Conduct

The Deregulation Movement While the public interest theory postulates that regulation
is undertaken to overcome market failures, so as to ensure that the economic system
operates in a manner consistent with the public interest (see Section 12-2), the
economic theory of regulation expounded by Stigler and others postulates that
regulation is the result of pressure-group action and results in laws and policies that
restrict competition and promote the interest of the firms that they are supposed to
regulate (this is the “capture theory” discussed in Section 12-1)
There are many ways by which national governments regulate international trade. Some
of these are tariffs, quotas, voluntary export restraints, antidumping duties, as well as
technical, administrative, and other regulations
An import tariff is simply a tax on imports. As such, it increases prices to domestic
consumers, reduces the quantity demanded of the commodity at home and imports
from abroad, and encourages the domestic production of import substitutes. The nation
also collects tariff revenues
RISK ANALYSIS

Managerial decisions are made under conditions of certainty, risk or uncertainty.

Certainty refers to the situation where there is only one possible outcome to a decision
and this outcome is known precisely.
Risk refers to a situation in which there is more than one possible outcome to a decision
and the probability of each specific outcome is known or can be estimated
Uncertainty is the case where there is more than one possible outcome to a decision
and where the probability of each specific outcome occurring is not known or even
meaningful.
A strategy refers to one of several alternative courses of action that a decision maker
can take to achieve a goal.
States of nature refer to condition in the future that will have a significant effect on the
degree of success or failure of any strategy, but over which the decision maker has little
or no control.
a payoff matrix is a table that shows a possible outcomes or result of each strategy
under each state of nature.

MEASURING RISK WITH PROBABILTY DISTRIBUTIONS

Measuring risk is the following: The probability of an event, An Absolute Measure of Risk: The
Standard Deviation, Measuring Probabilities with the Normal Distribution.
The probability of an event is the chance or odds that the event will occur.
An Absolute Measure of Risk: The Standard Deviation, we have seen above that the tighter or
less dispersed is a probability distribution., the smaller is the risk of a particular strategy or
decision. The reason is that there is a smaller probability that the actual outcome will deviate
significantly from the expected value.
Measuring Probabilities with the Normal Distribution, the probability distribution of many
strategies or experiments follow a normal distribution, so that the probability of a particular
outcome falling within a specific range of outcomes can be found by the area under the
standard normal distribution within the specified range.
Utility Theory and Risk Aversion, the reason for this is to be found in the principle of diminishing
marginal utility of money.

ADJUSTING THE VALUATION MODEL FOR RISKS

Risk-Adjusted Discount Rates One method of adjusting the valuation model to deal with n
investment project subject to risk is to use risk -adjusted discount rates. These reflect the
manager’s or investor’s trade-off between risk and return
 The indifference between the expected and required rate of return on a risky investment and
the rate of return on a riskless asset is called risk-premium on the risky investment.

OTHER TECHNIQUES FOR INCORPORATING RISK INTO DECISION MAKING

A decision tree shows the sequence of possible managerial decisions and their expected
outcome under each set of circumstances or stated of nature. Since the sequence of decision
and events is represented graphically as the branches of a tree, this technique has been named
“decision tree”. the construction of decision tree begins with the earliest decision and moves
forward in time through a series of subsequent events and decisions.
Another method for analyzing for analyzing complex, real-world decision making situations
involving risk is simulation.

DECISION MAKING UNDER UNCERTAINTY

The maximum criterion postulates that the decision maker should determine the worst possble
outcome of each strategy and then pick the strategy that provides the best of the worst possible
outcomes.
the manager does not know and cannot estimate the probability of success and failure of
investing in the new product. Therefore, he or she cannot calculate the expected payoff or
return and risk of investment.
Another specific decision rule under certainty is the minimax regret criterion. This postulates
that the decision maker should select the strategy that minimizes the maximum regret or
opportunity cost of the wrong decision, whatever that state of nature that actually occurs.
Regret is measured by the difference between the payoff of a given strategy and the payoff of
the best strategy under the same state of nature.
After determining the maximum regret for each strategy under each state of nature, the
decision maker then chooses the strategy with the minimum regret value.
there are number of less formal methods that are commonly used by decision makers to reduce
uncertainty or the dangers arising from uncertainty. Some of these are the acquisition of
additional information, referral to authority, attempting to control the business environment
and diversification.
The decision maker can sometimes deal with uncertainty by requesting the opinion of a
particular authority (such as Internal Revenue Service o tax questions, Securities and Exchange
Commission on financial investment, Labor Relations Board on labor questions, or a particular
professional association on matters of a particular competence).
Diversification in the types of products produced , in the composition of security portfolios, and
in different line of business by a conglomerate corporation is another important method by
which investors attempt to reduce risk.
 Hedging refers to the covering of a foreign exchange risk. Hedging is usuall accomplished with a
forward contract. This is an agreement to purchase or sell a specific amount of a foreign
currency at a rate specified today for a delivery at a specific future date.
future contract. This is a standardized forward contract for predetermined quantities of the
currency and selected calendar dates.

INFORMATION AND RISK

Asymmetric Information and the Market for Lemons One party to a transaction often has less
information than the other party with regard to the quality of the product or service.
The Insurance Market and Adverse Selection The problem of adverse selection arises not only in
the market for used cars, but in any market characterized by asymmetric information, such as
the market for individual health insurance.
Moral Hazard refers to the increase in profitability of an illness, fire, or other accident when a
individual is insured than when she is not.
insurance, the loss of an illness, fire, or other accident is shifted from the individual to the
insurance company.
Long-Run Investment Decisions: Capital Budgeting

Capital budgeting refers to the process of planning expenditures that give rise to revenues or
returns over a number of years
In general, firms classify investment projects into the following categories:
1. Replacement. Investments to replace equipment that is worn out in the production process.
2. Cost reduction. Investments to replace working but obsolete equipment with new and more
efficient equipment, expenditures for training programs aimed at reducing labor costs, and
expenditures to move production facilities to areas where labor and other inputs are cheaper.
3. Output expansion of traditional products and markets. Investments to expand production
facilities in response to increased demand for the firm’s traditional products in traditional or
existing markets.
4. Expansion into new products and/or markets. Investments to develop, produce, and sell new
products and/or enter new markets.
5. Government regulation. Investments made to comply with government regulations. These
include investment projects required to meet government health and safety regulations,
pollution control, and to satisfy other legal requirements.
Capital budgeting is essentially an application of the general principle that a firm should produce
the output or undertake an activity until the marginal revenue from the output or activity is
equal to its marginal cost.
In a capital budgeting framework, this principle implies that the firm should undertake
additional investment projects until the marginal return from the investment is equal to its
marginal cost.

THE CAPITAL BUDGETING PRPOCESS

Projecting Cash Flows, One of the most important and difficult aspects of capital budgeting is
the estimation of the net cash flow from a project.
A typical project involves making an initial investment and generates a series of net cash flows
over the life of the project.
The cash outflows usually include the incremental variable costs, fixed costs, and taxes resulting
from the project.
The net present value (NPV) of a project is equal to the present value of the expected stream of
net cash flows from the project, discounted at the firm’s cost of capital, minus the initial cost of
the project, deciding whether or not a firm should accept an investment project is to
determine the net present value of the project
The internal rate of return (IRR) on a project is the discount rate that equates the present value
of the net cash flow from the project to the initial cost of capital, minus the initial cost of the
project, determining whether a firm should or should not accept an investment project is to
calculate the internal rate of return on the project.
Top management may also be reluctant to raise additional capital by selling stocks because of
fear of losing control
THE COST OF CAPITAL

The firm can raise investment funds internally (i.e., from undistributed profits) or externally (i.e.,
by borrowing and from selling stocks).
The cost of using internal funds is the opportunity cost or foregone return on these funds
outside the firm.
The cost of external funds is the lowest rate of return that lenders and stockholders require to
lend to or invest their funds in the firm. In this section we examine how the cost of debt (i.e., the
cost of raising capital by borrowing) and the cost of equity capital (i.e., the cost of raising capital
by selling stocks) are determined.
there are a least three methods of estimating the cost equity capital. These are the risk-free arte
plus premium, the dividend valuation model, and the capital asset pricing model (CAPM).
The cost of debt is the return that lenders require to lend their funds to the firm.
the cost of equity capital is the rate of return that stockholders require to invest in the firm. The
cost of raising equity capital externally usually exceeds the cost of raising equity capital
internally by the flotation costs (i.e., the cost of issuing the stock).
The Weighted Cost of Capital, in general, a firm is likely to raise capital from undistributed
profits, by borrowing, and by the sale of stocks, and so the marginal cost of capital to the firm is
a weighted average cost of raising the various types of capital.

REVIEWING INVESTMENT PROJECTS AFTER IMPLEMENTATION

a review involves comparing the actual cash flow and return from a project with the expected or
predicted cash flow and return on the project, as well as an explanation of the observed
differences between predicted and actual results.

THE COST OF CAPITAL AND INTERNATIONAL COMPETITIVENESS

During the most 1980s, the cost of capital was much higher in the United States than in Japan
and in many other major industrial nations, and this was one of the factors that undermined the
international competitiveness of U.S. firms.