The Role Of The Commerce Commission In Promoting Competition In New Zealand Case Study

Section Two
The Role of the Commerce Commission in Promoting Competition in New Zealand
The role of the Commerce Commission is to promote competition in New Zealand. Consumers reap maximum benefits from markets that are dynamic and goods and services that are offered at competitive prices. In the case of allocative efficiency, the market uses resources efficiently to produce goods and services that satisfy consumer preferences. The Commerce Commission ensures allocative efficiency by encouraging fair competition and discouraging anti-competitive business practices. In addition, it ensures that no single producer controls market prices. For instance, it prohibits price fixing tactics and abuse of market position by businesses. In so doing, the Commerce Commission ensures that resources are efficiently allocated and market price of items is the same as their marginal costs (“Anti-competitive practices”, 2015).
The purpose of the Commerce Act 1986 and how it relates to imperfect competition
The purpose of the Commerce Act 1986 is to encourage competition in New Zealand by prohibiting restrictive trade practices and other activities that reduce competition in the market. Imperfect competition occurs when there

The phases include contraction, trough, expansion and peak. At the moment, the New Zealand economy is at the expansion phase. The expansion phase is characterized by economic growth and expansion as well as positive GDP. In the third quarter of 2015, the New Zealand economy recorded positive growth following the recovery of the agriculture and mining sector. The GDP for the second quarter of 2015 grew by 0.4 per cent (“Economy still growing”, 2015). Household spending increased by 0.9 per cent while business investment increased by 2.2 per cent. On a yearly basis, the GDP grew by 2.5 per cent implying that the New Zealand economy is slowly recovering from recession (Hall, & McDermott,