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The Bike Hanger - Copenhagen Series

Published on Jul 29, 2018

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PRESENTATION OUTLINE

The Bike Hanger - Copenhagen Series

Entrepreneur: Kaspar Peek of KP Cyclery | Jacob Noh 

Property Rights

  • Denmark: Property Rights Index is scored at 87, which means property rights are very well protected; this includes real property, intellectual property, and private property.
  • USA: Property Rights Index is scored at 81. This is not as high as Denmark's, but there is still a guaranteed protection of property.

Property Rights Index

Economic Freedom

  • Denmark: Economic freedom score is 76; this gives Denmark the12th freest economy in the world.
  • USA: Economic freedom is 75.7; this gives the US the 18th freest economy in the world.

Economic Freedom Scores

Competition

  • A nation with an economic competition score of 5 and above is considered to be very competitive.
  • Denmark's score is 5.4.
  • The US's score is 5.9.
  • Although they are both competitive, the US economy is more so than Denmark's.

Competition

Role of Government

Both Denmark and the US have mixed economies, so the government does have a role in business. The Danish and US Governments place taxes on goods and set regulations on business and marketing. They also allocate production resources and intervene if any corruption ensues. However, they cannot control what is produced and who it is produced for; that is the job of businesses like KP Cyclery.

Photo by 401(K) 2013

3 Basic Economic Questions

3 Basic Economic Questions

  • What to produce is decided by businesses in Denmark; KP decides that he wants to produce the bike hanger.
  • How to produce it is decided by businesses, but regulated by the Danish government.
  • Whom it is produced for are Danish and foreign consumers; they're the ones who decide if they want to buy it.

Gov't Restrictions

  • Production: There are no real restrictions on the production of products like the bike hanger.
  • Sales: Door-to-door sales are prohibited by law, but telephone and internet marketing are allowed. KP has a website for his product, so this may be better for his business.

Gov't Restrictions

  • Investment: Liberal policies promote foreign investment, not restrict; Denmark is the 10th most attractive nation for foreign investment, so KP's bike hanger could receive more foreign support and trade.

Taxes

  • As a sole proprietorship, KP would have to pay personal income tax.
  • He'd also have to pay self-employment tax.
  • If KP does trade with other nations for the bike hanger materials, he'll also have to pay tariffs.
Photo by rawpixel

Monetary Policy

  • There is a fixed-exchange-rate monetary policy in Denmark.
  • An interest-rate increase would strengthen the krone against the euro, and a decrease would weaken it.
  • The goal is to keep the krone stable against the euro.
Photo by Kakadu

Monetary Policy

  • This could affect the income of KP Cyclery through its sale of the bike hanger, and may force a change in pricing.
Photo by Kakadu

Fiscal Policy

  • Denmark is experiencing a gradual tightening of fiscal policy.
  • There is a public sector deficit, along with low gov’t spending, but unemployment is decreasing.
  • More speed in the economy would lead to a hard slowdown.

Fiscal Policy

  • If fiscal policy were to loosen, businesses would have to pay less tax; however, since fiscal policy is tightening, businesses like KP Cyclery must pay higher tax to appease gov't revenue.

Sources

See side notes
“Denmark.” The Heritage Foundation, The Heritage Foundation, www.heritage.org/index/country/denmark. Accessed 29 July 2018.

Global Property Guide. “Economic Freedom Rating - Denmark Compared to Europe.” Global Property Guide, Global Property Guide, www.globalpropertyguide.com/Europe/Denmark/economic-freedom. Accessed 29 July 2018.

“United States.” The Heritage Foundation, The Heritage Foundation, www.heritage.org/index/country/unitedstates. Accessed 29 July 2018.

Global Property Guide. “Economic Freedom Rating - United States Compared to North America.” Global Property Guide, Global Property Guide, www.globalpropertyguide.com/North-America/United-States/economic-freedom. Accessed 29 July 2018.

Global Property Guide. “Competitiveness Rating - Denmark Compared to Europe.” Global Property Guide, Global Property Guide, www.globalpropertyguide.com/Europe/Denmark/competitiveness. Accessed 29 July 2018.

Global Property Guide. “Competitiveness Rating - United States Compared to North America.” Global Property Guide, Global Property Guide, www.globalpropertyguide.com/North-America/United-States/competitiveness. Accessed 29 July 2018.

klgriffin Follow. “How Do Economic Systems Answer the Basic Economic Questions.” LinkedIn SlideShare, 11 Oct. 2010, www.slideshare.net/klgriffin/how-do-economic-systems-answer-the-basic-econo.... Accessed 29 July 2018.

“Denmark - 1-Openness to, and Restrictions Upon, Foreign InvestmentDenmark - Foreign Investment.” Liberia - Telecommunications, International Trade Administration, 8 Aug. 2017, www.export.gov/article?id=Denmark-openness-to-foreign-investment. Accessed 29 July 2018.

“Denmark - Direct MarketingDenmark - Direct Marketing.” Liberia - Telecommunications, International Trade Administration, 8 Aug. 2017, www.export.gov/article?id=Denmark-Direct-Marketing. Accessed 29 July 2018.

“Monetary and Exchange Rate Policy.” Monetary-Policy Instruments, Danmarks Nationalbank, 1 Feb. 2017, www.nationalbanken.dk/en/monetarypolicy/implementation/Pages/Default.aspx. Accessed 29 July 2018.

Jensen, Teis. “Denmark Should Tighten Fiscal Policy despite Falling Public Deficit...” Edited by Terje Solsvik, Reuters, Thomson Reuters, 27 Mar. 2017, www.reuters.com/article/denmark-should-tighten-fiscal-policy-despite-fallin.... Accessed 29 July 2018.ark-economy/denmark-should-tighten-fiscal-policy-despite-falling-public-deficit-economists-idUSL5N1H4322. Accessed 29 July 2018.