Monday, March 28, 2005

Beyond Price Competition

Many security analysts on Wall Street are fond of focusing on price competition when analyzing companies and industries. While it is useful to think about prices, Schumpeter believed that the competition that really matters in not price competition among a large number of firms producing a homogeneous product. Rather, it is:

"the competition form the new commodity, the new technology, the new source of supply, the new type of organization -- competition which commands a decisive cost or quality advantage and which strikes not at the margins of the profits and the outputs of the existing firms but at their foundations and their very lives."

The nanotechnology revolution will usher in an entirely new way of manufacturing products -- one that will envolve creating new products molecule by molecule using self assembly techniques that have never existed before. Schumpeter's thoughts on the kind of competition that drives the capitalist process should be kept in mind as the nanotechnology revolution accelerates.


Post a Comment

<< Home