Role Of The Commerce Commission On The New Zealand Economy Essay

Role Of The Commerce Commission On The New Zealand Economy Essay

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Section Two
The Role of the Commerce Commission
The role of the Commerce Commission is to promote competition in the New Zealand economy. 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 efficient allocation of resources and that market prices of items are the same as their marginal costs (“Anti-competitive practices”, 2015).
The Purpose of the Commerce Act 1986
The role of the Commerce Act 1986 is to encourage competition in New Zealand by prohibiting restrictive trade practices and other anti-competitive market activities. Imperfect competition occurs when there are many sellers selling heterogeneous goods. As a result, sellers have the power to influence market prices and consumers end up paying more. The Commerce Act 1986 discourages imperfect competition by prohibiting practices that discourage competition and ensuring that sellers do not abuse their power. In addition, the act regulates utility services like electricity and gas by making sure that providers do not abuse their dominant market position (“The legislation”, 2015).
The Purpose of the Fair Trading Act 1986
The Fair Trading Act 1986 discourages imperfect competition and protects consumers from unfair and mi...


... middle of paper ...


...cannot measure the wealth or welfare of individuals.
The Phase of the New Zealand Economy
The business cycle refers to the four phases of economic growth and decline. 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 second quarter of 2015, the New Zealand economy recorded positive growth following the recovery of the agriculture and mining sectors. GDP for the second quarter of 2015 grew by 0.4 per cent (“Economy still growing”, 2015). In addition, 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, 2011).

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