Monday, February 2, 2015

When Should a Business Pullout From an Overcrowded Market?

The density of living organisms of the same species living in a specific area may affect the growth, development, reproduction and death of those organisms. The higher the density of such population the higher the death rate and the lower the growth and reproduction rates. The density of a population may thus determine the growth and death rates of such population. The effect of the density is not instantaneous, but witnesses a sort of time lag. The growth, birth and death rates within a population is affected by the density of such population but it takes some time for such effect to appear.

Similarly, in economy, the effect of crowding of businesses in a specific market may not show instantaneously. A time lag can be witnessed between the actual crowding of businesses in a market and the effect of such crowding showing on the growth and death rates of such businesses. This phenomenon can be used to the advantage of some businesses which can make use of this period of time to make profits before pulling out from a market that has become overcrowded.