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The law of economics of the best business web hosts comparison

By Staff

The competitiveness of the web hosting industry fits the law of modern economics.
In economics we learn that the most competitive form of industry is the perfectly competitive industry. In real life, there is no such thing as a perfectly competitive industry. A perfect competition is an economic model in which the producer and the consumer has no power to influence price. A perfect competition would be a very efficient market where consumers would get the best prices and the businesses would get the most profits for their profits in this environment. According to most economists, a stock market closely reassembles this as the price of the stock is determined by what the buyers value the company and what the sellers value the company. But even in this instance, it isn’t a perfectly competitive market because large institutional investors such as the mutual fund company or government can intervene and purchase lots of shares in one company causing a fluctuation in price such as the bear sterns incident.

But one example that most economists fail to mention in the new era is the web hosting industry. The web hosting industry is perfectly competitive. There isn’t’ a single big player or big consumer that can influence the price for web hosting. There are practically hundreds of thousands of web hosting companies out there and people are continually creating new companies daily. Just by purchasing a reseller account, an individual can instantly become a web hosting company. People are looking to create new websites, but they won’t have problem finding the best website hosting reviews company. As soon as you type that word in Google, you see millions of queries. The pricing for web hosting is dropping even as the growth of the internet has not reached a plateau. Companies are including more features in their plans and lowering the cost such as additional domain names in one account. Previously, you need to purchase one domain name per account, but recently more and more companies (in order to remain competitive) are making their web hosting account support unlimited domains. As a result, the consumer has less of a urge to purchase another account. With a web hosting account it is very easy to start and end a business. With just a simple design you can be online in minutes.

In the web hosting industry, it is easy to enter and leave the market and no single individual or company can ever influence the price of web hosting. Adding additional servers to a infrastructure can be done in hours and even if the government decides to intervene and purchase web hosting for each and every governmental agency, there would be new web hosting companies popping up immediately and current web hosting companies will just purchase additional servers for the increase in business. Margins in the web hosting business is high so even if a web host gets no new business, they can always make recurring income off existing customers. With the advent growth of the internet for centuries to come, the web hosting industry will surpass the definition and meaning of a perfectly competitive industry.

 

 
     
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