Business Studies

Respond to the following in a minimum of 175 words:

• Innovation and physical capital are 2 of the 4 factors of production. Discuss some specific ways that 1 of the following laws increased the productivity of 1 or both of these factors of production:
• 1862 Pacific Railway Act
• 1956 Federal Aid Highway Act
• 1946 Federal Airport Act
• What other examples of economic concentration can you share?
• What are the risks and advantages to economic concentration?
• How has economic concentration influenced your industry?

ANSWER

President Dwight D. Eisenhower signed into law the Federal-Aid Highway Act in 1956. Resulting from it, was a 41,000 mile ‘National System of Interstate and Defence Highways’ (History.com). The move was targeted at the elimination of roads that were not safe, routes that were not efficient, and avoid traffic jams. The idea had a military basis as well following the logic that should America get an atomic attack with its rivals at that time, movement of people from unsafe areas would be prompt. The project was essential to the national interest (History.com).

The effect on the economy was enormous. By the beginning of the 21^st century, there were at least 250 million cars in the United States. That is almost one car per every person that lives there. In comparison to the end of the 19^th century, there was approximately one car per every 18,000 Americans. The road project resulting from the act is vital for production as is the general rule of production that, “a region’s industrial and employment base is closely tied to the quality of the transportation system” (Weiner 2016). Good transport as a resource allows reception of inputs designed for production and similarly distribution modes of finished products. Similarly, it promotes lower overhead production costs which generally improves quality and profit availing more resources for innovation.

Economic concentration simply refers to the extent to which a market is occupied by producers in an industry. This phenomenon can be an advantage or disadvantage depending on the product in question. For instance, the market concentration of the construction of the interstate highways ensured equal distribution of transportation by road. However, for other products that are not intended for the wellbeing of the community but for profits, market concentration is highly discouraged because it leads to high prices and inadequate innovation or proper competition that keeps products and services in the market high in quality.

References

History.com. the Interstate Highway System. Retrieved on 16^th July 2020 from https://www.history.com/topics/us-states/interstate-highway-system

Weiner, E. (2016). Launching the Interstate Highway Program. In Urban Transportation Planning in the United States (pp. 33-44). Springer, Cham.