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Comparative Advantage

There is a lot of money invested in researching new helmet designs. It seems that every year there is a new standard that should blow the competition and previous models out of the water. In an article by Vice Sports, the football coach of St. Edward's Central Catholic High School in Elgin, Illinois, Mike Rolando, talks about the price of the latest and greatest in football helmet technology. The new Riddell SpeedFlex helmet costs him four hundred dollars per helmet. At this price he will be able to purchase about 12 helmets over the following four years depending on the programs budget (Moore). Rolando is willing to pay this price because he wants kids to play football and be safe. The article also points out that this price is at least fifty dollars more than competitors' helmets. It seems as though this higher price is able to be set because of the claimed innovation and technology that goes into each product. As stated in the Vice Sports article, the company is able to make claims such as, it is able to “reduce concussions or the risk of concussions by 31 percent” (Moore). Claims like this can spark something in the consumer. The company Riddell is the major provider for helmets for most major organizations. A Chicago Business article by Danny Ecker states that there is a youth football organization known as “The Chicagoland Youth Football League” and Riddell provides the majority of the helmets to the league. Up around 75 percent (Ecker). This isn’t a unique story. Many universities supply their players with Riddell helmets and also, as stated in the Chicago Business article, the company has a 25 year sponsorship deal with the National Football League (Ecker). With a control over the market like this, the company has massive control over the price it sets for its products. A large part of the high price of helmets is the millions upon millions of dollars in lawsuits that the company has faced, as stated by Ecker. Ecker also talks about how this has caused the company to raise prices to almost double in the last 10 years (Ecker).

The brand Riddell has established itself as the helmet of choice in the sport. This establishment of brand has helped protect this company much like Nike. In an article by Enloe called “The Globe Trotting Sneaker”, there is a price breakdown of the shoe. In this, Nike is shown to charge a price for their shoes that is almost seven times the cost of labor and materials. The majority of the price make-up comes from markups for both Nike and the retailer (Enloe, 516). Since Riddell sells their products directly to their consumers, the majority of their price would likely be for their own markup. Both of these companies are able to charge pretty much whatever they want because of the control that they have over the market. They were able to gain this power due to the neoliberal policies that prevent government regulation in these markets. There has been a little backlash in this area. Navia argues how regulation in certain areas is beginning. Helmet producers in the youth sports sector are being required to allow third party safety testing. He says that they have also been required to refine their safety claims so that they make claims that are more honest. He also argues that these regulations allow smaller companies to begin to thrive in this market (Navia, 271). The lack of neoliberal policies benefit smaller producers and allow for more innovation. If this market was truly neoliberal, and had no regulations, then the companies on top could become oligopolistic. With more regulations on price and claims on safety, the producers would be required to sell based on innovations and actual product accomplishments rather than stretching the truth. The market would be flattened to include many smaller companies and the competition and innovation would be much higher.

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