The spillover effect is the domino effect you never expected. You didn’t know that burrito would give you food poisoning, causing you to miss that job interview. Or that meeting your dog’s dog-friend’s owner would lead to you getting your next job.
The spillover effect is like that, but with big-picture economics as opposed to personal economics.
It’s when an event happens that results in an unexpected economic consequence on a large scale…”spilling over” into other areas. Negative externalities are oftentimes spillover effects. For instance, a firm that's polluting...leading to higher healthcare costs and cancer rates nearby.
On a larger scale, things that happen with the U.S.’s economy oftentimes have a spillover effect to other areas of the world. Which is why everyone knows about America, but Americans don’t know about everyone else. Except China. We know about China.
Since China is now the second largest economy after America, it too is having spillover effects onto other nations’ economies. China’s economy was growing like crazy, but has recently slowed. This means they’re buying less from other countries, and that effect is rippling through all of those economies.
For instance, take the U.S. and China trade war. While this obviously affects the U.S. and China (since tariffs suck for both sides, putting a damper on GDP), it also affects other nations that trade with the U.S. and China. Since the world is so globally connected nowadays, domino effects are increasingly common. When the dominos continue to fall, affecting outside parties, you have a spillover effect.
Countries like North Korea are pretty immune to spillover effects, since they’re pretty independent of the international economy. Welp, that’s one thing going for their economy.
Related or Semi-related Video
Finance: What are oligopolies and oligop...6 Views
And finance Allah shmoop What are Olongapo Lease and Ola
GOPs unease All right people you've heard of monopolies you
know like this guy It's where there's on ly one
option for a particular service Like only one place Tio
by it for example The waterworks Yeah the electric company
maybe certain railroads You know if you don't live near
a train huh Yeah You know we're looking at you
Okay So those air monopolies What's in Olongapo Lee Well
let's take a brief detour to ancient Greece We'LL hit
New play by Sophocles is burning up the box office
Nude wrestling is popular and there's a couple of words
will want to be familiar with We've got mono which
means one or alone as in monotone Ah monolithic and
monogamous We've also got old leg which comes from the
Greek Oly ghost It means few monopoly means one place
You can buy stuff like the electric company waterworks in
the Microsoft operating system in the nineteen eighty nine So
Oleg op Aly means there's a few places you can
buy that thing It's better than a monopoly for the
buyer in terms of competition but it's not a fully
competitive market either Like you live in a small town
way out in the desert There's nothing else around for
at least a hundred miles There's one gas station in
town in that gas station Well basically has a monopoly
on all the local business Basically whatever that gas station
wants to charge for gas well you'LL have to pay
it You don't have anywhere else to go After a
while someone else opens up a second gas station Now
there's two places in town and now you've got the
beginnings of an Oleg op Aly The gas station's compete
on Price It's still not perfect competition Both stations have
good pricing power because well they control so much of
the market But they keep each other in Check their
sort of duopoly if you will A lot of cities
have oligopolies in grocery stores A few brands will have
locations in an area but competition's pretty thin on a
national scale True oligopolies or hard come by and still
some industries have virtual oligopolies like cell phone service for
example right we have Verizon and tea and just a
handful of other smaller providers exist But generally speaking people
are forced to choose among the big players Right Eighteen
Bryce and Sprint maybe T Mobile You know guys like
that computer operating systems or another biggie you could load
up on one of those crowd sourced operating systems that
you're weird basement dwelling cousin prefers But in practice you're
almost certainly going to use Microsoft and or Apple and
that's about it Often end up with an oligopoly There
needs to be significant barriers to entry in a market
Well these barriers of entry can take the form of
high fixed costs to get into it like cost a
billion dollars Teo make an oil rig or a billion
dollars Teo make a billion lines of code and operating
system or something like that Or you have to get
a government license like for a broadcaster to do it
or to build a bridge that takes tolls If that
can be private or maybe make a parking lot or
something you have to get the town's approval Your favorite
pet ferret Mr Pillows Bright then dies You loved him
You don't want a new fair If you want another
Mr Pillows bright so you decide to clone him well
There are three pet cloning companies to choose from Copy
Rover Ink Me Al Again Corp and Trans Jean rendering
Reina plaques limited You go with trans gene because well
they have the most scientific sounding name Unfortunately Mr Pillows
Bright the second comes back with no teeth and purple
for when you complain while the guy it trans gene
says Well you should see some of the monsters they
make over a copy Rover and yell again Consider yourself
lucky dude And obviously you're not happy with the results
but you don't have a lot of choice You're stuck
with the old leg op early so you decide you
want to break up the Oleg Awfully by starting a
new competitor A fourth player in the market problem one
that cost you Khun barely afford the special ferret food
for Mr Pillows Bright the second to gum at with
his you know toothless chewing A new cloning machine cost
millions of dollars high barrier to entry not unlike the
cell phone companies with both expensive cell towers they put
up and government approval they need or the operating systems
that makers have you know their products preloaded onto millions
of computers And yeah that doesn't work either So problem
number two starting your own pet cloning business Well government
regulation Minor detail Congress recently passed the Freedom and Truth
in Animal Cloning and Patriotic Apple Pie Act along with
raising taxes on apple pie and approving funds for a
new long reign stealth bomber The law requires all animal
cloning facilities to obtain a license from the FDA Well
copy Rover Miao again in Trans Jean All have licenses
already You don't Their lobbyists are now swarming around Washington
whispering all kinds of negative things about you to make
sure nobody else gets a license Yeah that's another barrier
to entry So those air all Oleg Op Elise now
onto holy gaap Sinese You've still got that bit of
Greek swimming around in your brain right You'll guess this
term represents another situation where a few companies are involved
while you're right there But in this case they aren't
selling They're buying And ola gops Any refers to a
situation where there are only a few buyers for a
product Like for those nude pictures you have of Warren
Buffett wrestling Bill Gates All right well in the real
world The classic example comes from the defense industry and
the aerospace industries Right If you build stealth bombers or
solid rocket boosters you really don't have a whole lot
of choices in who to sell to This guy might
be rich but he's not rich enough to buy a
stealth bomber and this guy might be really rich But
he's not rich enough for a rocket ship and all
right well maybe this guy is But generally the market
is very small for buyers of that kind of stuff
So you're basically selling to a couple of the Richard
governments in the world and the mostly really just the
US depending on whatever laws are in place that further
limit your options and selling your wares All right so
quick Review Olonga please Or a few companies that dominate
a market unlike a monopoly where just one he's usually
come up because of high costs of entry and or
some big skill and or some kind of government licensing
that's applied to make it hard for any competition to
come in The market works better than a monopoly for
the buyers but doesn't have the characteristics of a truly
competitive market like if there were eighty sellers and they
all competed vigorously for price Meanwhile Enola GAAP Sini involves
a market where there are only a few buyers Like
typically these air high cost items or items limited by
regulations Think defense military rockets all that kind of stuff
Yeah or could be items with a very very specific 00:06:39.093 --> [endTime] market No
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