Susan Fleck wrote: > On a lighter note, in response to Doug Henwood's comment on McDonalds... > They are suffering sales because they microwave their burgers these days! > blech! > (I won't tell you how I know.) On a more serious note, let me answer Doug's recent comments. *Why* are sales decreasing at McDonalds? In an oligopolistic market, a large amount of money capital per firm is "invested" in product differentiation, especially advertising and marketing. The recent decline in sales at McDonalds can be explained in this context -- not in the context of continuous technical change or increasing labor plus capital (fixed and circulating) costs. It is well-known that McDonalds strategy of promoting the adult burger is a colossal failure, for instance. Oligopolies gamble big on advertising and marketing -- and sometimes lose (to the advantage of other oligopolies in the market). Now, it would be very easy to conclude based on the _WSJ_ article that there is a profitability problem in the market as a whole rather than for individual firms. It would be very easy to conclude that *if* one assumes that what is happening at McDonalds is also happening to other firms in the market *and* if one doesn't consider the specific nature of competition in that market. Jerry
