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- Title
Growth on the demand curve: The new kind of growth.
- Authors
Gipson, James
- Abstract
The article reports that growth means increasing prices and a good company is one which is good at climbing an inelastic demand curve. This radical change in business economics has meant a spectacular improvement in the profitability of a few favored industries and individuals. Inflation made a radical change in business economics by creating a golden opportunity to grow through price increases rather than only through production increases. After a long period of low inflation, most businessmen simply did not think in terms of large price increases, but it was only a matter of time before someone saw that opportunity and capitalized on it. Television broadcasting is a good example of the new kind of growth industry. Its supply curve is static and it produces virtually no more programs or commercials from one year to the next. It is very good at raising prices to the advertisers who pay for those commercials. The major risk associated with a price-oriented growth company is that it will no longer be able to raise prices with impunity.
- Subjects
CORPORATE growth; FINANCIAL performance; INELASTIC demand; PROFITABILITY; MANAGERIAL economics; BUSINESS forecasting; PROFIT; PRICE level changes; PRICE variance
- Publication
Journal of Portfolio Management, 1980, Vol 6, Issue 2, p46
- ISSN
0095-4918
- Publication type
Article
- DOI
10.3905/jpm.1980.408727