Literature Review
A country can ensure sound and healthy competitive environment in the market when it adopts and implement both economic policy and competition law with due manner.UK competition commission has defined market competition as a process of rivalry between firms seeking to win customers business over time. Stucke (2012) argued that competition is like athletic game which seeks cooperation from suppliers, wholesalers, retailers and consumers. In distribution chain competition can be vertical among the firms. It’s also normative in nature. Market participants through legislature, industry codes, or informal norms set the rules and punishments.
Cseres observes that
“Although the two legal disciplines focus on different market failures and offer different solutions and apply different techniques to correct market failures they are both aimed at keeping the market competitive and try to bring market performance close to the model of perfect competition……
These are actually two different approaches to achieve the same goal: a competitive market where consumer sovereignty is safeguarded and welfare is maximized. Competition law and consumer protection are thus mutually reinforcing disciplines.”
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The law decrees the creation of a Bangladesh Competition Commission (BCC), which is to be responsible for the implementation of the law (Competition Act 2012). As this law is not implemented yet so questions remain regarding whether this Can be implemented in a way that will control existing anti-competitive business practices or not. Before the enactment of the competition Act, there were no specific policies or laws for governing the market practices and actions except Monopolies and Restrictive Trade Practices Ordinance (MRTPO) of
“Processor Editorial Article - Antitrust Laws: Not Just For The Big Boys.” Editorial.Processor 19 Nov. 2004: 27+. Processor.com. Web. 29 Nov. 2011 .
The anti-trust laws were set in place to promote vigorous competition but also to protect the consumer from unfair mergers and business practices. The first antitrust law that was passed by Congress is called the Sherman Act and is a “comprehensive charter of economic liberty aimed at preserving free and unfettered competition as the rule of trade” according to www.FTC.gov . Later in 1914 Congress passed two more laws, one creating the Federal Trade Commission Act (FTCA) and then the Clayton Act, which now create the three core federal antitrust laws that are still active currently. Although they have changed over the last hundred years, they still have the same concept: “to protect the process of competition for the benefit of consumers, making sure there are strong incentives for businesses to operate efficiently, keep prices down, and keep quality up” as stated by the FTC.gov website on The Antitrust Laws.
This organization belongs to the oligopoly market structure. The oligopoly market structure involves a few sellers of a standardized or differentiated product, a homogenous oligopoly or a differentiated oligopoly (McConnell, 2004, p. 467). In an oligopolistic market each firm is affected by the decisions of the other firms in the industry in determining their price and output (McConnell, 2005, P.413). Another factor of an oligopolistic market is the conditions of entry. In an oligopoly, there are significant barriers to entry into the market. These barriers exist because in these industries, three or four firms may have sufficient sales to achieve economies of scale, making the smaller firms would not be able to survive against the larger companies that control the industry (McConnell, 2005, p.
To widen the market and to narrow the competition is always the interest of the dealers... The proposal of any new law or regulation of commerce which comes from this order, ought always to be listened to with great precaution, and ought never to be adopted, till after having been long and carefully examined, not only with the most scrupulous, but with the most suspicious attention. It comes from an order of men, whose interest is never exactly the same with that of the public, who have generally an interest to deceive and even to opprress the public, and who accordingly have, upon many occasions, both deceived and oppressed it.
The United States has an abundance of fair practices laws that intend to make things fair, yet competitive. I feel that these laws are absolutely effective in helping to balance our country. Fair practices in business protect the businesses as well as the consumers in many ways including: monopolization protection, conspiring to fix pricing or allocate customers, price gouging, and many other important protections (SBA, 2013).
Regulations can be perceived as implementation objects of policy statements. The general regulation comprise controls on markets entries, wages, prices, pollution effects, development approvals, employment for particular people in certain industries, the military services and forces, and standard of production for specific goods (Holt, 2014). The economics of inflicting or removing regulations involving marketing is analyzed in regulatory economics. Regulations may generate costs alongside benefits and may generate unexpected reactivity effects for instance defensive practice. Effective regulations can be analyzed as those where entire benefits surpass total costs. Whether a business is big or small, the law requires it to take reasonable steps to curb discrimination and aggravation. In small businesses where the proprietor has direct link with the staff, a written policy is sometimes unnecessary and a plain statement of your anticipations of conducts at work may suffice. There is also a need to have a procedure to take care of any complaints.
The current issues that have been created by the market have trapped our political system in a never-ending cycle that has no solution but remains salient. There is constant argument as to the right way to handle the market, the appropriate regulatory measures, and what steps should be taken to protect those that fail to be competitive in the market. As the ideological spectrum splits on the issue and refuses to come to a meaningful compromise, it gets trapped in the policy cycle and in turn traps the cycle. Other issues fail to be handled as officials drag the market into every issue area and forum as a tool to direct and control the discussion. Charles Lindblom sees this as an issue that any society that allows the market to control government will face from the outset of his work.
There are four major market structures; perfect competition, monopolistic competition, oligopoly, and monopoly. Perfect competition is the market structure in which there are many sellers and buyers, firms produce a homogeneous product, and there is free entry into and exit out of the industry (Amacher & Pate, 2013). A perfect competition is characterized by the fact that homogeneous products are being created. With this being the case consumers have no tendency to buy one product over the other, because they are all the same. Perfect competitions are also set up so that there is companies are free to enter and leave a market as they choose. They are allowed to do with without any type of restriction, from either the government or the other companies. This structure is purely theoretical, and represents and extreme end of the market structure. The opposite end of the market structure from perfect competition is monopoly.
As with all markets and their respective economies, having equilibrium is one of the key factors of a successful system. Although most markets do not reach equilibrium, they attempt at getting close. There are numerous methods devised to reach equilibrium, whether they involve human intervention directly or a cumulative decision by all factors involved. These factors may be a seller's willingness to lower overall revenue, or a buyer's willingness to withhold some demand for a certain product. Of course, the basics of supply and demand retrospectively control the equilibrium in the market.
Monopolies have a tendency to be bad for the economy. Granted, there are some that are a necessity of life such as natural and legal monopolies. However, the article I have chosen to review is “America’s Monopolies are Holding Back the Economy (Lynn, 2017)” and the name speaks for itself.
In conclusion, market structure is important because it leads to strategic decision making. Having a working knowledge of market structure impacts decision making because organizations will learn the characteristics of their competition and how the market will response to changes. This report discussed the four different types of market structures: monopoly, oligopoly, monopolistic competition, and pure competition. It went into detail about what each market structure was and gave every day examples of them. Additionally, it will outlined the type of market structure AutoEdge fits into, how that market structure impacts the level of competition, elasticity of demand, price, and position in the industry.
In a perfectly competitive market, the goods are perfect substitutes. There are a large number of buyers and sellers, and each seller has a relatively small market share. Perfect competition has no barriers to information regarding prices and goods, meaning there is no risk-taking behaviour – sellers and buyers are rational. There is also a lack of barriers for entry and exit.
Legitimate terms may seem confused to normal people, which is the reason perplexity generally happens throughout lawful methods. To have a deeper understanding of the fundamentals with respect to legitimate techniques, let us examine the contrast between two terms: Private law and open law. The point when is law viewed as open or private? Read on to figure out.
The second market structure is a monopolistic competition. The conditions of this market are similar as for perfect competition except the product is not homogenous it is differentiated; thus having control over its price. (Nellis and Parker, 1997). There are many firms and freedom of entry into the industry, firms are price makers and are faced with a downward sloping demand curve as well as profit maximizers. Examples include; restaurant businesses, hotels and pubs, specialist retailing (builders) and consumer services (Sloman, 2013).
This intimate knowledge of the market is essential for creating a self-regulatory framework, which is perceived as appropriate and reasonable by the regulated individuals and entities. This will result in a tighter degree of compliance by the market participants operating within the self-regulatory framework. Self-regulation involves a combination of private and Government supervision. Self-regulatory organisations because of their nature are more flexible to adapt to the changing requirements of the market. Self-regulation has proved to be effective because in a self-regulated organisation, regulations are framed by market participants who have close knowledge of the market and know how to maximise regulatory