Economics

    Oil have been known to human being for very many centuries, the Eastern world historic literature have shown oil abundance, the Bible and the Apocrypha allude to oil exploration Noah  the legend tightened his ark seams using pitch indicating use of fluid bitumen at his time, the Deuteronomy have mentioned oil out of the flinty rock. Oil is believed to have been a major factor in the ancient Judea and Persia trade. The burning wells in Eastern nations like the wells of Baku seemed miraculous to primitive people at that time, these wells have continued to flow into this century without running out of oil or being exhausted, led to emergence of the Zoroastrians or the fire worshippers, this worship was also amongst the ancient Indians. There were also some medicinal values attached to the petroleum at the source. The Greek legends used petroleum to burn the criminals and slaves (The World Traveler 1).

    Romania is the first country where modern scientific and commercial oil lines first began across the sea, though united states is the country producing highest quantity of oil in the world, it entire the field in Pennsylvania discovery virtues in 1895. Italy was the third country to start organized oil production followed by the following countries in this order Canada, Russia, Galicia, Japan, Germany, India, Dutch East Indies, Peru and Mexico.

    Col. E. L. Drake is the fonder of the petroleum industry because he innovated better ways of mining and solve a lot of mining problems at that time that would latter make the States a rich nation. This saw the evolution of well drilling of oil, he drilled the first well near the Titusville, Pa., in august 1859. Other countries emulated the states on their late achievements especially on drakes innovations.

    The figure 1 below shows the world oil repartition, North America have evidently consumed most of its oil reserves with Middle  East having the largest of oil that is not yet explored. This brings forward the swing share idea, for some time to come they can comfortably meet the world oil demand rather comfortably (The World Traveler 2).

Yellow line reveals the world share of oil production, green highlights prices, in the year 1973 at first oil shock time share was 38, and by 1985 it has reduced to 18 because other nations had also started production. The share index is now at 30 and we dont expect this to reduce any soon because there is no country going to be a new force in mass production apart from those already existing (The World Traveler 5).

    When the U.S oil production peaked, other countries specifically got the pressure to compensate for the deficit gap created by the U.S, specifically Saudi Arabia and followed by Iran took action, they were the only countries globally that could fill up this gap in global oil production. For this to happen, Saudi Arabia had no option but to increase the oil production in doubles and volumes than it did produce earlier, this also applied to Iran (Ben 5).
    In the early 1970s there was a massive increase in global oil demand and market, the global demand of oil was only 20 million barrels per day, but ten years down the line the demand shot to 50 million barrels per day. As the U.S oil production increases to peak, the Saudi Arabia oil production was only 3 million barrels per day. This was later to be taken over by the Saudi Arabia as the largest oil producer in the world.
 Figure  SEQ Figure  ARABIC 2 Growth in Global Oil Demand. Barrels per day in millions (dollars)
 EMBED MSGraph.Chart.8 s

    The global oil demand has been on the rise with a deep in around the year 1985 according to figure 5, there after the prices have continued to increase gradually to 2000. This increase in global demand of oil is attributed to increase in growth of demand of oil products and also due to demand for power to fuel faster growing economies like china. This demand is likely to increase and will definitely see the depletion of the oil reserves. US is one of the largest consumers in the world, though it is resorting to alternative sources of energy, a number of researches are underway to find the possibility extracting liquid energy like petroleum from coal, if this comes through then it would be a new world order on the energy world.

 EMBED MSGraph.Chart.8 s     In the early 1999 the world ran out of oil leading to increase in crude oil prices from 12 to 60. Since that time the supply of oil globally has increased by 10 according to a study by IEA (International Energy Agency), in 1999 it was 65.8 million barrels and rose to 72.5 million barrels in 2004. Global oil production capacity is estimated to double by 2010 to about 16 million barrels of oil per day (www.nab.com.au).

    These increases of oil prices are due to the decline in the value of dollar and speculation, when the dollar value deteriorates then al the commodities related to it are affected directly as the suppliers look to keep their purchasing power constant. Speculation is also another phenomenon which is rather complex, the higher the uncertainty levels in the market the higher the levels of speculation in the oil market. Speculation obviously leads to various activities in the oil market for example hoarding of the oil which automatically leads to price escalation.

    Another factor leading to oil price boom is the increase in its demand by the fast growing countries like China, Brazil and India. Speculation in even higher growth in these nations including U.S has led to price increase and fueled by the problems of supply by suppliers like Nigeria, Russia, and Venezuela. Price increases are directly caused by the shortage of oil from the major oil producing nations.

    Shocks in oil prices have global stagflation effects on basically on the oil importers because it slow the growth rates and cause recession through reduced production levels leading to increase or a shoot in the prices of almost all the commodities and hence inflation in the said country. These effects size varies according to a number of factors the oil shock size, persistence of the shock, the level of oil dependency and energy in the country and the policies in place on monetary and fiscal bodies.

    OPEC foundation lead to oil decline in member countries in 1979 to 1980 purchasing power per barrel reduced. Arab exporting states introduced the Arab Oil Embargo in 1973 on U.S and other states supporting Israel leading to 400 price increase of oil in just six months. Price increases between 1979 and 1980 are also attributed to the Iraq-Iran war which doubled oil prices during the period. These high prices led to the non-OPEC producers which led to lower demand of oil in the OPEC organization member states hence plummeting of oil to record below 10 a barrel. These prices shot up again due to the Gulf War when Iraq invaded Kuwait. Between 1990 and 1997 the global oil consumption increased turning the price cycle up. The US economy was stable and strong and a boom in the Asian Pacific areas.

    WTI (West Texas Intermediate) prices and Bret have fluctuated around  70 per barrel in July 2009. In august the prices rose by 11 in monthly average figures. Non-OECD Asia consumption increased led to EIA (International Energy Agency) to review their forces for global demand 2009 and 2010. Despite this volatility the Chinese import of crude oil has increased over this year which is attributed to increase in operation in domestic operation and continued oil strategic stockpiling. With such expected continued increase in china growth, we expect similar trend in the coming the years 2010 through to 2011 as long as this growth continue.
    IEA have revised to higher scale 2009 non-OPEC supply by 160kbd because of high levels of unexpected activities on US and Russia which improved the production. There was a remarkable increase in oil supply because of increase in the production capacities in these non-OPEC countries
Figure  SEQ Figure  ARABIC 5 Long-term and short-term aggregate supply of oil

    Inflation and oil prices have clear relationship, oil price increases causes short term aggregate supply to shift inwards putting pressure on price levels upwards in short, sharp increase in crude oil price leads to exogenous inflation , the impact felt is great when the nation is big oil importer, has several industries depended on oil energy in their production processes. There are factors that come in which may eliminate inflationary shock, lets take into consideration the high crude oil prices impact on aggregate demand. First inflation acts increase to decrease real incomes growth reduces pressure on demand by the consumers (AD Main component). Low demand growth, high levels of input costs (which pressures profit margin of a company) results to reduction in planned spending on investment (Ben 11)

    The monetary policy should respond to escalating oil prices by reducing spending through raising the short term interest rates. But tightening the monetary policy will result to increase in unemployment, reduced economic growth levels. Deflationary policies will consequently decrease the GDP, and if the slow down in production leads to recession the oil demand will decline as a result putting pressure on global oil prices. (Victor  James 7).

In the globalization era, financial and economical policies are interdependent on the developed and developing countries. Even a slight change in the economic polices of one country might have a major impact on the other states. Tackling the economic growth with forceful action on both the financial and macroeconomic policy fronts is the need of the hour. Policymakers must be mindful of the cross-border ramifications of policy choices. 

Macroeconomics identifies the driving elements behind the loose monetary policy. It foresees what the popular definition fails to do. Decline in demand is considered as a core force for recession. Aggregate demand is not fixed it can only be measured by means of prior production. The important factor that misleads producers regarding the conditions of the market is central banks easy monetary policy which leads to an artificial lowering of interest rates.

    Central banks easy monetary policy is one of the important misguiding factors for the producers by artificially lowering the interest rates. It gives wrong market scenario on which the producers relay on. This leads to activities which are away from the reality in turn leading to economic boom. Producers, commit mistakes relying on easy monetary polices misreading the market conditions. Loose monetary policies once tightened revels the correct picture of the market that spells out the factors for loose monetary policies on which measure are taken by abandoning the previous policies there by economic burst occur. When the central bank tightens its monetary stance it gives rise to liquidation due to the errors committed in business because of prior easy monetary policies.

Central Bank Monetary policy is the driving force that creates bubble-burst error in liquidation process, business that leads to recession. By looking in to the central monetary policies we can make know where the economy is presently placed in the bubble-burst. The extent of business errors is an indicating factor to differentiate whether it is an ordinary recession or a depression depending upon the boom of the economy. If the boom is longer the bust will be severe.

The negative implication for real pool funding is by increasing the money flow that gives rise to interchanging of nothing for something which in turn weakens the real saving and reason for underestimating the real pool of Injections. Important factor driving factor for bank lending is liberal financial markets and removing restrictions.

There are two bubbles recognized as of now in the economic perspective called asset-price bubbles can be divided into two types. The first type is credit boom bubble and the second type is known as pure irrational exuberance bubble. The first type is very dangerous and this occurs when structural changes and lively expectations occur in financial markets and this leads to a credit boom. The first type is very dangerous and this occurs when structural changes and lively expectations occur in financial markets and this leads to a credit boom. This loop involves in easing of credit standards and increasing leverage. The second type is not so dangerous because it does not involve in leveraging against higher asset values. The bursting of the bubble without the credit bloom does not cause inflation. The first one is the result of the structural changes in the financial markets and the over estimation of the economic prospects.

The major cause of present financial crisis is large scale housing boom and bust that resulted in the financial turmoil in U.S. It in turn affected most of the nations all over the world in the form of rescission. The range of rescission effected nations depending on the financial and economic policies existing at that time. There is a lot of difference in the economic policies and its effects on the developed and developing countries.
Condition of emerging states in economic front

Emerging market economies are that state which consists of low to middle per capita income. Emerging markets are those states which restructure their economies according to the market-oriented lines and recommend riches of opportunities in technology, transfers, foreign direct investment and trade. The important objective of the monetary policy is interrelated with current account equilibrium, price stability and exchange rate stability. The five biggest emerging economies are India, Indonesia, China, Russia and Brazil. The global economy is at a dangerous juncture. The credit crisis in most of the developed market economies are even more prompted by the persisting global imbalances, declining value of United States dollar, continuing housing lump and soaring oil and non-oil commodity prices increase risks to economic growth in developed economies as well as in emerging economies. The main cause of inflation around the world is increase in the commodity prices since 2007. The other factors include higher wages and excess capacity utilization. In addition to this, many countries could not understand whether to accept measures to control inflation or strengthen economy through fiscal and looser monetary policies. The emerging economies like china suggest looser monetary policies to ward off deflation and to guarantee powerful economic growth.
Advanced economies are already facing the recession problem. The mixture of negative growth and financial stress in advanced economies is escalating emerging market economies like Jamaica which require maintaining access to capital markets. The emerging market countries and the central banks in advance are taking steps to ease monetary policy as the inflation is receding. Many people think that loosing monetary will have drastic effect on the economy of emerging states. There is a well known asymmetry regarding monetary policy which plays a vital role and needs to be taken in to account. When the real economy of the state is growing quickly, tightening monetary policy with higher interest rates raises the cost of capital and this decreases the motivation to invest and thereby acts as a brake. But when the economy is stalled, loosening monetary policy does not eliminate the uncertainty which the firms are facing regarding the investment decisions. Therefore, looser monetary policies with low interest rates may not essentially act as accelerator. Until the primary underlying engines of economy start to put forth a pull, looser monetary policies have only limited effect on the economy of emerging states.

Loose economic polices by emerging states
The emerging economies has tightened polices to control inflation and incoming capital flows. Some of the emerging nations took measures in that process. As a whole the emerging state economies are affected by loosening monetary policies.

Emerging nations are going to be benefited from factors like least interest rates which help capital to flow into emerging world. Besides this, currency appreciation is an important question to the emerging economies due to high capital outflows. For example, Brazil has enforced 2 IOF tax on foreign capital inflows turning into fixed and equity income with the exception on Foreign Direct Investments.

Chinas monetary policy will continue to be tight but may be attuned according to the changes in global economy. US sub prime did not cause china to loosen its monetary policy for the reason that combating rising inflation continue to be a priority for economic planners. On the other hand, the Central bank would pay attention and amend policy according to the international and domestic situations. China could loosen its monetary policy to counter balance the depressing impact of global economic decline on Chinas growth. Some of the bond traders held that the central bank has eased its policy, permitting additional liquidity to stay in the domestic money market.

U.S and Europe is not effecting to the loose monetary policies rather only the emerging states are effecting. The present issue is how U.S is benefited by the loose economic policies of emerging states despite of their central banks is unable to tackle rise in inflation and incoming capital flows. In fact this may cause potential harm to them rather than good to their economy.

Reasons - Why loose economic policies effect emerging economies more
Inflation is becoming high as the monetary conditions are too loose in emerging economies. And also because people in the emerging economies spend most of the income on basics and so the prices of food, fuel and all the other essentials increase accordingly. This is not totally because of the loose monetary conditions but it is the result of the sequence of previous monetary policy decisions. The majorities of the high inflation emerging economies either rise to the level of dollar or get involved heavily to handle their exchange rate against dollar. There is great emerging market inflation of in 2007 and 2008. The Argentina, Russia, Gulf, Hong Kong and China and even others are trying to conclude whether the increase in inflation replicate increase in commodity prices or improper loose monetary policies.

The main difficulty for the emerging country which led the global recovery to execute an exit strategy is the weak US dollar current and loose US monetary policy.  Too early exit will delay in adopting exit strategy and render emerging economy to double-dip in global economy.

To fight the crisis and to combat on stimulating domestic growth, the international community should have a serious discussion about how they are going to cooperate with each other since no country can extract itself from global growth trend.

Chinas economy grew 8.9 and it is expected to show double-digit growth in the fourth quarter. The extreme loose monetary policy can fuel tentative investment in emerging countries property and stock markets. Inflation is not an instant result in China but the policy makers are paying close attention on the risk of asset bubbles. The rich economies have to suffer with deflationary pressure while the emerging economies are thinking how to remove incentive measures before inflation returns.

Very loose monetary conditions will cause rise in inflation. During the period of 2003-07, there were imbalances in housing, financial and commodity markets due to the loose monetary policies.

Loose monetary polices can only fetched the emerging states satisfying the short-term goals but in long run they will help the developed nations more. This should be revised by the policy makers and make sure that the policies are tightened and will benefit emerging nations more in future.

The article I chose, titled Toyotas Big Recall Unlikely to Quiet Critics, is an article relating to consumer welfare. Because of problems in sudden-acceleration, Toyota has announced to recall a number of 3.8 million vehicles. It is one of their strategies to silence controversies and critics. A number of complaints of sudden-acceleration have been dismissed by the company saying such happened due to the drivers fault. The welfare of the consumers is greatly concerned in this issue since Toyota is topping the list and beating other car producers when it comes to sales. Reports of sudden-acceleration which resulted to a deadly accident in California are one of the factors that pushed many car safety critics to do something for the protection of the consumers.

As a company producing an output that is needing safety by humans, Toyota should have further developed a more extreme quality measure in identifying failures and mishaps of their products rather than just innovating their products features. This article is relevant to consumer welfare because lives are endangered despite a good amount is paid to the company for their safety in using their cars. This article allowed me to further digest the importance of the consumers safety when a product is released in the market. Consumers are the reason why a demand is created and profit is generated to a firm. Therefore, the consumers deserve a just return of their moneys worth from purchasing a product or a service. The appraisal of economic outcomes, institutions and processes is used by the author of the article as philosophy. The author, Joseph R. Szczesny, presented the consequences that Toyota may undertake. If quality and safety issues will continue, Toyota will lose the trust of the consumers, thus making a huge decline in their profit for their products. If they dont settle the issue by not recalling the vehicles, the consumers will start to be dissatisfied by the kind of service and dedication they provide to their buyers. Since they settled the issue by recalling the vehicles, it will create a big expenditure for the company.

Therefore, to maintain the car companys reputation, they have to pay a big price. Toyota will lose its value if errors and quality mishaps such as this will continue to pursue. Total Quality Control should immediately be imposed in the production process. In addition, their must be zero percent failure of the product when they release it for selling. The issue of Toyota is micro economic. It is because the issue is within the firm. Though it involves a lot of outside factors from the firm, the root of the problem came from within. The author concluded by saying that the car company was planning to a 1 billion budget on incremental production, advertising and incentives. Toyota, who has seen 28 of their sales in the fall of 2009, said that one cannot save their way through recession, you have to sell. The author left a question asking if the consumers still want to buy.

    As to whether the consumer would still want to buy, it is indeed a big question that the author wants the people to ponder. The issue caused a big damage to the company. There may still be loyal Toyota consumer buyers who were satisfied with the product offered that will still continue to buy from them. But for many of the life-conscious citizens, they might think twice in buying a car from Toyota. Toyota, for me, has handled the issue well since they took the responsibility of recalling and replacing the defects of their products. In the future, this will again generate trust to the consumers because the company didnt abandon their responsibility to their buyers. For now, there might be decreased revenue but in the future, Toyota will surely revive the lost trust from their valued customers. Toyota is a company who believes in continuous improvement. Surely, the company is now thinking and doing ample measures to further better their product and services.

Ever since the raising of global consciousness on global warming, it has been a continuous trend for industries and consumers to recognize the importance of green technologies. In fact, aside from global warming, other factors such as environmental awareness, cost implications, and even the reduction of over all pollution either in developed economies or further growth in developing countries has played a major role not only in policy in government but also in private industries.

Transportation, as is evident from the various research and studies that have been gathered in this paper, is one of the most significant contributors to the steady increasing rise in problems in the environment  ADDIN ZOTERO_ITEM sorttrue,citationItemsitemID276 (Heald et al., 2003). Environmentalists and environmental economists have continuously pointed out that the problem of greenhouse emissions from transportation -- either in the public or private field -- is an issue that must be addressed the soonest time possible.

As a result, over the past few years, because of certain economic trends that have popularized this issue, consumers, public policy makers, and even private firms have reacted to such modern issues through the creation, implementation, and distribution of hybrid vehicles. Interestingly enough, as with any action that has to do with various interactions of the market, economics and the various disciplines that fall under it have a significant contribution to the study of hybrid vehicles in the United States. Specifically, because the research paper is approaching the problem from a democratic and free market approach, the issue of the factors affecting the demand for such hybrid vehicles became an important study which would be able to generate other implications and future actions both for consumers and private enterprises of such action. This paper would therefore revolve around the concept of the demand for hybrid vehicles in the United States -- both in theory and in application -- and be able to generate a conclusion that would be suitable to the problem that has been addressed.

As with any properly constructed research in the field of economics -- and in that case any scientific field -- the first order of business is to identify the problem of the research. For this specific study, the problem would be what our various factors affecting the demand of hybrid vehicles in the United States. This general problem, although broad, captures not only the analytical concepts that would be used in the paper but also the various specific approaches and steps in order to arrive at a solution and conclusion of this report.
First, it would be the task of this paper to able to highlight the objectives, significance, and theoretical methods that would be used to answer the question. After it has done so, it would proceed by providing an extensive literature review on the various significant factors that would be important in the methodology and the analysis. After the said literature review, the paper would proceed to the actual methodology of the report that highlights how the research problem and the various objectives would be answered and achieved respectively. In order to do this, the paper would be using both qualitative and quantitative techniques of analysis.

The last section of this paper would be to provide the various results and implications of the various data that had been gathered as well as the accompanying analysis that has been made. Following it would be a conclusion and a summary of the various important points that has been generated by the research.The objective of this paper is to be able to identify the various critical variables that would significantly affect the demand of hybrid vehicles in the United States. Also, another objective is to have a complete an exhaustive discussion on the subject from the point of view of economics and the relevant science is involved that would eventually come up in such discussions. As has already been pointed out earlier in the beginning of the research, the study could be pointed out to be extremely significant because of the fact that various modern social variables such as environmental awareness, cost implications of fossil fuels, and a host of other factors has led to development of hybrid vehicles. Its distribution has been hailed in many countries -- specifically developed countries and economies -- around the world today but is significantly recognize in the United States because of its ability to produce and manufactures such vehicles, as well as the indicated desire by consumers to carry out individual production functions in a socially and environmentally aware manner while at the same time still follow utility maximization theories and minimization of costs -- factors that would be discussed extensively in the literature review section of this research.

However, it is here where we must point out the essential approach which is the theoretical and analytical framework that would be used. From an analysis point of view, because it is the factor of demand, the framework that would be used is the willingness to pay of consumers in the economy for such hybrid vehicles. In the study of economics, demand is basically captured by the two-dimensional willingness to pay locus of points which is then created by the various variables affecting it. This theoretical framework, although can only be used in a partial equilibrium setup of the perfectly competitive market economy, would nevertheless be an important aspect of the present and future research -- as well as answering our questions -- because it would be able to identify through qualitative and quantitative means significant factors that affect such demand. Other frameworks in other science disciplines in measuring demand make use of non-parametric tools of estimation. Although such methods could also provide valuable insight, we would be limiting this study to demand from the point of view of economic estimation because it is the issue that we would like to address in the research. This theoretical framework of demand side economics through willingness to pay estimation of variable significance, as would be seen, has been used in a number of other products and services in the past and present and would be a reliable methodology to highlight.
Literature on the subject reflects that in the United States, one of the most significant economic issues that are faced by regular consumers today are the prices of transportation derivatives such as fuel prices and oil. In fact, such sources have pointed out that this issue does not only come from certain population demographics that own private vehicles, but also from the public sphere as well because transportation costs are significantly affected -- in fact first and foremost affected -- by such fossil fuels and gas prices. In a study that was published in 2001, it has been indicated that in the United States, although greenhouse gases as well as sustainability of agriculture and forestry playing important environmental rules on the public opinion, there is still the tendency of the general consumer population to go back to cost reduction in day-to-day expenses -- going back to gas prices and transportation costs  ADDIN ZOTERO_ITEM sorttrue,citationItemsitemID15406 (McCarl  Schneider, 2001). In another study that was published in 2005, furthermore, authors have reviewed the possibility of making use of such negative externality in order to boost of government revenues and make government responsible for the correction of such externalities and problems through the proposed gasoline tax  ADDIN ZOTERO_ITEM sorttrue,citationItemsitemID8173 (Parry  K. A. Small, 2005). However, even though there have been high willingness to pay of consumers for such taxation and externality direction by the government, there were also accompanying problems with the proposed solution such as the problem of other states not having a high enough willingness to pay for such corrective measures and even problems relating to the mistrust of other sectors of the population is not allocate indirect amount of correction enough for cost implications for the end consumer  ADDIN ZOTERO_ITEM sorttrue,citationItemsitemID8173,position2 (Parry  K. A. Small, 2005).
As a result for such indicated problems, together with modern innovations in fuel economy as well as the various incentives that have been promoted to researchers regarding the development of the close that would not only be environmentally safe and productive but also efficient from the cost perspective of the general public, hybrid vehicles have been developed both by public and private researchers -- researchers at usually belong to automotive manufacturers -- to continue such development projects. As early as 1997, a research article had been published on the various systematic designs of electric and hybrid vehicles that could be probably use in todays modern organized economy  ADDIN ZOTERO_ITEM sorttrue,citationItemsitemID10128 (Ehsani, Rahman,  Toliyat, 1997). Although this paper would not anymore preferred to delve into highly technical details, it would at least be useful for the researcher and the reader to understand that there have been many problems that have been encountered by scientists developing the said new technology from the standpoint of the necessary costs required not only to produce them but also for consumers to maintain them ADDIN ZOTERO_ITEM sorttrue,citationItemsitemID2344 (Schouten, Salman,  Kheir, 2002). As a result, there is also extensive literature that has been uncovered on the subject of individual agencies -- both interested in profit maximization and in the public good -- creating various economic projections and models on the sustainability, profitability, and cost implications of hybrid vehicle use in the United States. Any study that was published as early as 1999, various researchers had tried to simulate the use of electric and hybrid vehicles on various configuration possibilities in order to make it cost efficient. However, again, the problems that the researchers had eventually met is that because of the high expense that is required not only to purchase the Beatles as a form of overhead cost but also in the day-to-day maintenance of running those vehicles as a form of variable cost, consumers would probably not be willing to pay for the purchasing and even operation of such vehicles  ADDIN ZOTERO_ITEM sorttrue,citationItemsitemID14323 (Rizzoni, Guzzella,  Baumann, 1999).

However, one must remember that technological advancement and improvement -- even in the realm of transportation and not only in consumer electronics -- follows a geometric rate of growth and progression associated to the Moores Law of the doubling of technological growth every few months. As opposed to other literature indicated above the high inefficiency of electric and hybrid vehicles in the United States, modern literature has pointed out that because of developments in the technology, it is now equally competitive to purchase and operate such hybrid vehicles at the same -- or even sometimes significantly lower prices -- as traditional vehicles  ADDIN ZOTERO_ITEM sorttrue,citationItemsitemID9867 (Ehsani, Emadi,  Gao, 2009). Although it has been proven that systems that run completely on electricity may largely be inefficient to the general public because a number of other factors pointed out by accompanying literature, a hybrid solution would be efficient because of the modern energy management systems as these vehicles that would be able to balance fuel economy and energy use  ADDIN ZOTERO_ITEM sorttrue,citationItemsitemID9222 (Moreno, Ortzar,  Dixon, 2006).

From the point of view of economic theory, when such a technology exists and finally enters the market -- a kind of technology that is more efficient not only from an environmental perspective but also from a cost perspective -- then such economic models claim that consumers would of course absolutely shift to such new technology. However, researchers on the subject have pointed out that this is not the case and there are still factors affecting both the level of demand and the elasticity of demand of consumers for such hybrid cars in the United States  ADDIN ZOTERO_ITEM sorttrue,citationItemsitemID117 (Higgins, Matthews, Hendrickson,  M. J. Small, 2007). In fact, other researchers have already made use of a methodology where in the dominant variable of gasoline crisis in the modern age, even though it is still high as compared to electric vehicle and hybrid vehicle consumption, had been applied and discovered that this was not the only factor affecting the demand for such vehicles in the United States -- although as we would discover later it is a significant variable indeed  ADDIN ZOTERO_ITEM sorttrue,citationItemsitemID5535 (Beresteanu  Li, 2008). There are many other various literature available on the subject. However, for the sake of brevity, these are the essential ones that have been uncovered by the research and would aid greatly in the development of both the methodology as well as the analysis of the problem in order to meet the objective.
The hypothesis that would be offered by the research, because it is mainly in economics and statistical problem, is that whether or not various indicated variables have a significant effect on the demand of hybrid vehicles in the United States today. This is the only hypothesis that would be used in the research. However, remembering that by saying various variables, theyre actually many hypothesis that must be tested. Statistical techniques on the subject would be discussed later. However, for now, it would be wise for the research to indicate the hypothesized variables for statistical testing before the actual methodology is introduced.
Gasoline price is the first variable that must be taken into consideration. In economic theory, substitute goods would significantly affect the demand of a product. This is represented by either an upward or downward shift of the theoretical demand curve. Gasoline would be able to shift the demand curve of hybrid cars upwards if the price of gasoline is high, and shift the demand curve downward -- at least in theory, something that the statistical test would use.

Price of these vehicles -- both overhead and variable -- would be another variable that would be taken into consideration in hypothesis testing. If the prices of either the overhead or purchasing costs of these vehicles are too high, or if the price to maintain it is too high, then it would also shift the demand of these vehicles downward. The same would be true to the contrary. However, such a relationship would also be tested more rigorously because there could be an instance where the price of the overhead cost for these vehicles would be high but the maintenance costs are low -- such is the modern case of modern hybrid vehicles. The same intuition could also be used to the contrary.

A third important variable would be personal preferences. Although price and other market factors are powerful influencers of demand, personal preference and a utility that individuals and markets could be able to derive the consumption of these vehicles would also theoretically significantly affect the demand for vehicles in the hybrid category.

The main statistical tools and methods that have been used by economists in order to highlight the relationship and significance of variables are the correlation and regression analysis and techniques. A correlation analysis could be able to either prove or falsify the hypothesis indicated above that each of the three variables are significant elements affecting the demand for hybrid vehicles. Although the mathematical model for correlation would not anymore be included in this research -- there are many other references in literature available on the specified methodology in its simplest form -- we could at least point out that such a method could easily be achieved by making use of statistical packages as long as there is data available on the three variables that have been indicated above. Together with recent or future data on the propensity of consumers that by modern hybrid vehicles, the study would be able to generate the set date of relationship and variable. Through the statistical technique, the research may be able to prove the significance of the variables in affecting demand.

Although not related to answering the problem and objective of the study, it would at least be interesting to note that a regression analysis as an additional tool for correlation may be able to predict the actual effect on demand when individual variables change. Again, a regression methodology is fairly simple and available in various literature on the subject. Basically, what their aggression analysis would do is to highlight a best fit the line across the data samples and correlation of the variables highlighted above -- together with the data of actual sales of hybrid vehicles today -- and generates a statistical result.

However, analyzing the factors that affect demand would only be an initial step of the research process. After the researcher has been able to highlight significant variables and underlined there is a true direct economic relationship between the hypothesized variables and the results of the demand for hybrid vehicles, then the eventual implication of the actual application of these estimates must then be questioned and be brought into the table.

Perhaps the single most essential application of this research and the evidence gathered is that of forecasting the future of the demand of hybrid vehicles. Fortunately for the study, there have already been other studies that have been made by other researchers which has actually followed the methodology indicated above -- of course including and removing some variables depending on the research question that each researcher has it forward. However, there is a common conclusion that could be found from all the research and literature gathered on the subject -- that gasoline prices, among all the other variables, is the most significant predictor of the demand for hybrid vehicles in the United States. Although the other variables of consumer preference and the price of hybrid vehicles have been pointed out to be statistically significant, there is a large scale of difference between the significance of these variables and the significance of gasoline prices. The statistical tests have shown that although there could be perhaps a 10 to 20 increase on present and future demand of hybrid vehicles if the preferences for these vehicles and the prices of these vehicles go down, there is a basic agreement between researchers that as much as 80 of the propensity and willingness to pay of consumers for these hybrid vehicles increase depending on the movements of gasoline prices. Again, we reiterate the fact that studies have already been made on variable estimation on the same problem that has been identified earlier on the research. Gasoline prices, it seems, is the most statistically significant and relevant variable both from the perspective of economic correlation and predictive regression.

What, then, because of the numerical evidence and qualitative evidence that we have gathered in the literature review, would be the implications of such findings on the future of the demand for hybrid vehicles in the United States

Remember that although traditional economic, business, and statistical analysis would probably answer that the demand of hybrid cars in the future and the forecasting of the future markets for such vehicles would probably depend solely on the variables that have been proven and indicated by their research. However, one must also remember that especially in modern economics and associated analysis of modern methods, the operations of a certain market -- in this case hybrid vehicles in the United States -- does not necessarily occur in a vacuum. There are other factors that must be taken into consideration. These factors, when analyzed, also have specific market and all its implications for the United States.

For example, even though gas prices has been pointed out to be the major significant variable in determining the future of the market of hybrid vehicles, it is nevertheless be recognized that many of todays politicians in the United States are backed up by campaign money by large multinational petroleum companies.

Discoverers and producers of hybrid vehicles are still small scale not only with respect to profit but also with respect to political scope and power and this could also be a significant factor in determining demand of the future markets of hybrid vehicles. In the long run, even if there has been extensive proof of the consumer welfare benefits that may be given by shifting to hybrid vehicles, if such companies do not yet reach economies of scale to be large corporations enough to influence political decision-making in the United States complicated political arena, then it would not have any hope against the various legislations of policymakers regarding the laws surrounding transportation. Furthermore, institutional analysis that is recently being undertaken by modern economists in understanding the operations of the modern market has pointed out that long-standing monopolies -- specifically petroleum companies -- do not only control the market through the political sphere but also through other partner organizations that have significant effect in society as well such as mass media, religion, and social institutions.

So, in forecasting the future demand of hybrid vehicles in the United States, another factor that must be taken into consideration is the ability of producers to sustain long-run profitability for these vehicles. Long-run profitability, from an economic standpoint, requires that there are large numbers of producers and sellers in the market. Because of recent issues on patterning and rights Association, manufacturers of hybrid vehicles are actually destroying their own future and markets by not allowing other organizations to develop and improve upon the technology that may have integrated into their vehicles.

And yet another factor that must be integrated into the analysis of forecasting the market for these vehicles is that there are yet other substitute goods that are being developed by the automotive industry and even small and medium enterprises that invest on other relative goods such as those of natural gas propulsion.
Even factors of public transportation of making use of light rail transit could also play a role in the future of hybrid vehicles in the United States.

Therefore, in all the research and evidence that has been gathered, it might at first seem to be extremely difficult to provide an overall conclusion on the forecast of the market. On one side, using statistical and economic methods such as the one used above in the identification and analysis of the variables, there seems to be an assurance that gas prices, when reaching significantly higher levels, would eventually result in consumers shifting to hybrid vehicles. However, it must be noted that gas prices are ready excessive especially in the United States and therefore raises the question of the other problems and variables that may not have been indicated in the traditional associated variables relating to hybrid vehicles in the country. The research may at least say that from a purely economic standpoint, crisis of substitutes would be the most significant of the three. However, it must also highlight the importance of understanding the political economy of the country to be another factor that must be taken into consideration by other research. This conclusion, although satisfactory at lease from a single perspective, would at least provide avenue for future research on the subject because it would allow researchers to integrate yet other variables that have not been traditionally made use in economics in approaching the demand of hybrid vehicles in the United States. In fact, recent developments on institutional methodology are already being made by institutional economists today in trying to integrate a game theory approach on the probability of legislation -- or in this case and scenario a specific market good -- to go through not only regulatory process but also the various social and political hurdles that it may encounter in computing for demand. This future research may indeed be valuable to contribute on the literature of the demand for hybrid vehicles in the United States

To conclude, the research has highlighted that hybrid vehicles in the United States is a possible market that could find improvement in the future especially considering the fact that there are many recent environmental variables that social groups, markets, governments, and even individuals are experiencing increasing awareness. The literature that has been made use in this paper has indicated that even though fast applications of hybrid vehicle technology would be largely inefficient for consumers, modern derivatives of the technology can be beneficial. Statistical tests that have been done by other research, also apply to this research, has pointed out that although there are many significant variables affecting the demand of hybrid vehicles in the United States, the most significant one is the prices of gasoline in the country. As a result, this would imply that in the long run, it is the crisis of petroleum and gasoline which will eventually dictate the future of the market of hybrid vehicles through addressing the market from the point of the demand.
However, the paper also extensively discusses the important issue that such a statistical model and the revelation of the significance of this statistical variable is not the only necessarily important factor especially from an economic and social political perspective. Recent methodologies in economics has pointed out that there are yet other significant market interactions that have traditionally been ignored by statistical analysts and economists but are nevertheless essential given the heavy literature and proof of burden of these second-generation effects.

Future avenues of research may include these variables in estimating the demand curves of hybrid vehicles. However, in this specific research, although the question and problem that has been pointed out above has already been resolved, it is nevertheless also important to indicate avenues of discrepancy and problems in the data set future methodologies may be able to solve.

Theories of the Firm
Firms are the wheels of modern economy. However, despite its benefits and utilities, the presence of firms is also the cause of many problems we know today. A firm represents an organization with all its complexities and barriers. In the worst case scenario, firms can be organizations that are hampering their members to obtain their goals, while in fact it was created to help people get what they need. Ultimately, intellectuals and young scholars are re-examining the justification of living in a world where firms and such complications are a way of life.
Theories of the firm are thoughts and research dedicated to answer the following questions
Why firms do exists
Why are there boundaries in Firms
Why are firms structured in specific ways
What drives differences of actions and performances of firms

Concerning the theories of firms, this paper discuss the case study on e-Bay and its dispute with the owner of Skype technology, Joltid, which asserts to be the worlds leading companies in the development of peer-to-peer technologies. The company was founded by the team who created Kazaa, a popular music download portal.
In particular, this paper would elaborate what ways does the article challenge some institutional theories of Firms Based on the evidence provided, which economic theories seem to explain best the evidence discussed in this article
Case study Skype
Firms and Increased Efficiency
The transaction cost theory stated that firms exist because there are people who have similar or reciprocal needs and they decide to cooperate and create under mutual agreement. In addition, the managerial and behavioral theory on the other hand, stated that firms exist because managers, leaders or owners are forcing their power on weaker people, so that they can have more of what they want. The team-approach managerial theory stated that managers might have their own best interests in mind, but they realize that by cooperating, individual needs are easier to reach.
Despite the differences of these theories, they all have the same root. All theories claim that by working together, they will increase the efficiency of their work, no matter whose interest in the groups minds. Within the article, it is this premise that is challenged. The article gallantly revealed its own sentiment that the formation of firms is not increasing the efficiency of work, but they are decreasing it.
The article indicated that the operation of a firm is identical to complication and costs to finance the intermediary parties that are standing between the people who are searching for goods or services and people that are actually providing them. Other reasoning stated by the article is that the formation of firms increases the relevance of agent issues, which means that once a firm is established, managers would have to find ways to motivate their employees who are taking orders from them and having less pay than them. Failure to motivate these employees will generate a decreased efficiency.

The article attempts to prove its point by revealing the case of Skype. Skype is a software application that allows users to make voice calls through the internet. Additional features are file transfer, instant messaging and video conferencing. The product has obtained wide customer base and it experienced rapid growth since launch of its service. The company was acquired by eBay in September 2005 (Biondi, 2009).
The service of Skype brings benefit to its customers and it was a highly prospective business. Nevertheless, when there are rumors that the parent company-E-Bay stated that it does not own the underlying technology, then the service lost its prominence. The writer of the article regrets such occasion could occur. The logic behind the occurrence is that Skype is beneficial to people not matter the holder of the technology and the creator. In reality however, people are not buying the function of Skype, but they are buying E-Bays brand name. This is why the writer of the article argue that the presence of firms actually mislead people from getting what they need.
This condition highlights the theory that technology becomes the key competitive advantages. Firms use electronics commerce in order to achieve improvements throughout the organization. The benefits of these improvements are better relationships with suppliers, more effective efficient operations, and improved customer service, to name a few.  The case of e-Bay that reveals the non-possessing technology of Skype decline the public beliefs on the sustainable advantages that e-Bay poses in the peer-to-peer services.
What constitute an effective corporate is a challenging issue. Referring to the definition of effectiveness, the best company is the one able to take advantage of available resource to produce the most benefits. Despite the importance of securing continuous resource flow to the company, the trick is actually more on how we manage available resources to produce the best outcome. This means that today, managers are increasingly demanded to manage corporate resources more effectively. Research and discussion about management skills and efforts of enhancing them are abundant.
Nevertheless, there are those resources that are highly valuable for firms, for instants, highly experienced managers, patents and new inventions in information technology. For these resources, firms are competing to increase their attractiveness and sensitivity, in order to be the first to gain the competitive advantage.
The actual benefit for business lake e-Bay is they must understand the opportunities that electronic commerce offers gathering intelligence about its customers and other environmental entities. The idea of recognizing customer behavior further evolves into customer relationship management (CRM).
Furthermore, the case also revealed another problem stem from the existence of firms, which are hold-ups. Hold-up is a strategy of preventing the existing contract from working by means of complaints and continuous objections, in order to direct people into negotiating a new contract. This process is considered the characteristics of all firms and therefore they are counterproductive.
In the end of the article, it is revealed that despite its argument regarding the absence of necessity in having a giant corporation name as a shelter for business offerings, the writer suggested a practical solution, which is for E-Bay to attain ownership of Skype and its supporting counterparts, so it can regain its long-time customers (Arthur, 2009).

The regression equation essentially incorporates various different factors that, in theory, should have a significant impact upon the demand for cigarettes. In accordance with the data and information provided through the application of the T-test, we can clearly judge the significance of each independent variable upon the dependent variable, which is the annual consumption of cigarettes. This brief report will principally try to relate the results of this particular regression in accordance with traditional economic theory.
Statistically speaking, the fact that the equation caters to 91 percent of the variation in quantity demanded means that the independent variables that have been incorporated in this regression analysis are extremely significant. The T-test ratio indicates that cigarette prices, advertising and both dummy variables, C and D, are statistically significant in regards to the regression. The income and cigar price variable is shown as not having a significant impact upon the annual consumption of cigarettes. This is essentially in line with economics theory because the income elasticity of demand for cigarettes is -0.09. This basically tells us that cigarettes are inferior goods, signifying that consumption for them falls when income rises. However, the fact that the value is close to zero can also lead us to the result that cigarettes can act as normal goods as well. This dual nature is primarily due to the fact that an increase in demand can result in brand switching as well as a case in which people, owing to the harmful effects of cigarettes, can switch to alternatives like nicotine patches.
Resultantly, the cigar price variable is also not statistically significant because cigarettes and cigars are not readily substitutable. This fact is also proven by the price elasticity of demand for cigarettes which is -0.29. The negative value indicates that cigarettes have a relatively inelastic demand. Economic theory also provides evidence of this in the sense that cigarettes do not have any substitutes in terms of products, although internal brand switching does occur because of price differences. Nevertheless, the annual consumption is not significantly affected by price change because smoking is an addiction and the psychological utility that it provides is unprecedented and cannot be catered for in any other way.
The value for the advertising elasticity of demand is pretty low and that signifies the fact that the relationship between cigarette consumption and advertising is not significant in the sense that an increase in advertising will not result in a considerable increase in the demand for cigarettes. Intuitively, this can be explained theoretically in the sense that cigarette advertisements are heavily monitored and are not frequently aired as well. The other factor that we must consider is that the value is an indicator of total industry demand and not individual firm demand. Therefore, the value of one single firms product would be significantly higher.
The regression coefficients for both dummy variables, C and D, are slightly correct in comparison with basic economic theory. After the American Cancer Society published its report linking cancer with smoking, the annual consumption of cigarette smoking did essentially fall because of the reduction in consumption of people who were not in reality addicted or practiced social smoking. However, the fact of the matter is that the data has been taken from the period 1947-1982 and the report was published during 1953. Hence, the period before the publishing of the report has not been properly catered for.
The dummy variable D, on the other hand, caters to a period of two years while the entire regression has been run on the basis of 35 years. Therefore, theoretically speaking, a variable with a data count of 2 years should not have a significant impact upon the entire equation.
Conclusively, it can be seen that most of the regression results can be explained through the application of traditional economic theory. However, the incorporation of the two dummy variables in regards to the impact that they have upon the overall equation, does in fact deviate from basic theoretical assumptions primarily because of data collectionmethodology mistakes.

The economic concept of elasticity refers to the change in one economic quantity in response to another economic quantity. Moreover, we are interested in the magnitude that one quantity changes in response to another quantity that it is dependent upon. This is what elasticity measures. If the dependent quantity does not vary much when the first quantity is varied, we term their relationship as relatively inelastic. When a small change in one factor creates significant changes in another, then their relationship is considered highly elastic. Some examples of elasticities include the income elasticity of demand - which measures the response in the demand of a product following an increase in income of the products market - and the price elasticity of demand  which measures the demand of the product in response to price changes.
The importance of these elasticities to the leader of the firm is rooted in how these elasticities forecast the demand for the firms product. Managers should know how their product is seen by the market and what factors will greatly increase or decrease the demand for their goods. Knowledge of these elasticity factors will also help the firm in determining how they will position and promote their product against all competing and complementary products in the marketplace.
For example, products with negative income elasticity of demand are termed inferior goods. This means that as the individual person gets more income then he or she purchases less of the product as opposed to superior goods which the public purchase if their income increases. Being aware of this could help a manager many ways. If he knows that his product is an inferior good, then the manager can then make moves to increase his products visibility and marketing efforts towards less affluent communities  communities where demand for his product is higher according to the income elasticity of demand. The same is true for the opposite case, products which are purchased in greater quantities by wealthier individuals should be sold to wealthy individuals. Products with zero income elasticity could be marketed at the same strength across all income strata. The usefulness of the income elasticity of demand is all in knowing what segments of society have higher demand for the product.
If income elasticity of demand could help in marketing, price elasticity could help in pricing. The law of demand states that all products will have non-increasing demand as the prices go up While supply and demand tells us that the equilibrium price is the best possible state since at this point, demand equals supply this is beneficial only for the market. The equilibrium price and quantity does not have to be the point at which the firms revenue on the product is the greatest. The relevant question now is this will the company make more revenue by pricing above or below the market equilibrium price If the product has relatively elastic demand, then any small change in price will result in a great increase in demand. This means that the company would have more revenue by pricing their product lower since the lower per unit revenue would be compensated for by the increase in demand for the product. The opposite is also true. If the products demand is relatively inelastic, then even if the price is increased, the magnitude in decrease of demand is less than the magnitude in increase of the price. The company can therefore feel free to increase prices since the corresponding drop in demand will be compensated for by the increase in per unit price.