Wednesday, May 14, 2003

Profit Margins

I'm a bit puzzled by something (well, not really). As anyone will learn in a basic economics class, while the pursuit of profit is the raison d'etre for businesses, profits themselves should be generally frowned upon by your efficiency-loving economist. Profits (or above normal rates of return) should exist as reward for innovation, or risk-taking, but otherwise are a sign of some market imperfection - generally market power. So, what can we conclude when the owners of the Philadelphia Inquirer doesn't consider a profit margin in the "mid-teens" to be high enough?

There sure as hell isn't any innovation going on there. Used to be a great paper - sad.