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chap 8 ques 6,8

chap 8 ques 6,8 - G roup 8 Chapter 8 questions 6 What is...

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Group 8 March 17, 2010 Chapter 8 questions 6. What is efficient congestion? How does this relate to market density? Is this relationship as straightforward as it seems? Efficient congestion is, “congested (high-density) markets that can promote efficiency in the performance of several basic distribution tasks, particularly those of transportation, storage, communication, and negotiation.” Market density is, “the number of buyers or potential buyers per unit of geographical area.” When it comes to transportation and storage, a high geographical concentration of customers allows for goods to be transported more easily because buyers and supplier are closer together. This makes efficiency higher in a more dense market. Communication and negotiations are more easily carried out in a more highly dense market. For example, if there is a need for face-to-face negotiations, this would be more effective if the parties did not have to travel as far. This would save both parties money and time.
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