Essay on "Competition Regulation"
Essay 3 pages (1022 words) Sources: 1
[EXCERPT] . . . .
CompetitionRegulation and competition: An overview of existing market structures
Broadly speaking, three basic market structures exist within most capitalist economies: monopolies, oligopolies, and perfectly competitive markets. In the case of a monopoly, a single industry dominates the marketplace. The government may use industrial regulation to control a monopoly if it is inefficient to have competition within the industry, as in the case of utilities such as electricity. The government usually heavily regulates legal monopolies to prevent prices going stratospherically high for consumers. The government may also permit an oligopoly to exist, when only a few firms exist within the industry, giving the firms a high degree of control over their prices unless the government regulates the companies (Economics basics: Monopolies, oligopolies, and perfect competition, 2010, Investopedia). High barriers to entry, such as large economic costs to enter the field, the need to make use of large economies of scale, or legal controls (such as drug patents) can foster an environment that gives rise to monopolies and oligopolies. In contrast, perfectly competitive markets are characterized low barriers to entry, many easily available substitutes, and a great deal of consumer power. These goods and services are often not subjects of industrial regulation, given that competition keeps prices low.
The government does not only regulate entities for economic reasons. It also regulates entities for social reasons, to protect consumers against unsafe products. For example, the Food and Drug Administration (FDA) evaluates the safety and effectiveness of pharmaceuticals; th
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Another form of social regulation exists within the labor market. When it is a 'buyer's market' for labor -- when companies can pick and choose whom they employ (which is often the case) -- if not regulated by the federal government, employers would be able to exercise unlimited discretion in selecting employees. Based upon an employer's desire to select whoever was 'like them,' in terms of appearance, the hiring manager could engage in discriminatory behavior, rejecting women, minorities, and differently-abled persons. By prohibiting such discrimination, regardless of the state of the labor market, the federal government hopes to create a more just society and protect workers' rights. The federal government also sets a minimum wage, to ensure that workers receive fair compensation for their work, and the price of labor does not sink prohibitively low.
Natural monopolies occur in industries "where there is a high ratio of fixed to variable costs. For example, the fixed costs of establishing a national distribution network for a product might be enormous, but the marginal (variable) cost of supplying extra… READ MORE
Quoted Instructions for "Competition Regulation" Assignment:
“ECONOMICS
Competition - The graduate analyzes a firm*****s competitive environment to determine whether the market exhibits characteristics of perfect competition, monopoly, oligopoly, and monopolistic competition.
Objective: Describe how the need for governmental price regulation differs for firms in different competitive environments.
Introduction: The study of government regulation and the competitive environment for business is relevant to all those who study business. All business candidates need to understand how the competitive environment will impact their employers and businesses.
Task: Write an essay (suggested length of 2*****3 pages) that describes the relationship between regulation and market structures and how regulation affects the market.
A. Define industrial (i.e., economic) regulation.
1. Explain why industrial regulation exists.
2. Explain how industrial regulation affects the market.
3. Explain the entities affected by industrial regulation in terms of market structure.
a. Explain why industrial regulation affects those entities you identified.
B. Define social regulation.
1. Explain why social regulation exists.
2. Explain the entities affected by social regulation.
a. Explain how social regulation affects the entities you identified.
C. Define natural monopolies.
1. Explain how natural monopolies are established.
2. Explain the justification for natural monopolies according to economic theory.
3. Provide an example to support your explanations.
D. Summarize the four major pieces of legislation collectively known as the Antitrust Laws.
E. Identify the three main regulatory commissions of industrial regulation.
1. Explain how these regulatory commissions govern industrial regulation.
F. Explain the major functions of the five primary federal regulatory commissions that govern social regulation.
How to Reference "Competition Regulation" Essay in a Bibliography
“Competition Regulation.” A1-TermPaper.com, 2011, https://www.a1-termpaper.com/topics/essay/competition-regulation/200579. Accessed 6 Jul 2024.
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