Predict the Impact on Organisation and Consumers of Government Policy :: Economics

Predict the Impact on brass instrument and Consumers of Government Policyon IndustryThe governments industrial policies seek to agree an impact onorganisations and consumers. The government has a wide range ofpolicies effecting ternary areas- Monopoly- Privatisation- Location of industryMonopoly and Restrictive PracticesMonopoly power may lead to consumers being exploited for example,prices charged above the true marginal cost of hang on - leading toexcess profits being made by suppliers in the market. Monopoly powercan overly lead to lower quality railroad siding of goods as the protectedposition of monopolist means that there entrust be a lack of incentive toimprove goods. Because of the potential economical welfare loss arisingfrom the exploitation of monopoly power, the Government regulates somemonopolies. Regulators can curb annual price increases andintroduce fresh competition into particular industries. In terms ofregulation of monopoly the government attempts to pre vent operationsthat are against the familiar interest - so called anti-competitivepractices.Problems occur when the market structure in a given industry becomesmonopolistic e.g. if a merger or a take-over causes a firm to supplymore than 25% of the market getup (defined as a working monopoly).The argument Commission investigates mergers. Oligopolies can alsolead to market failure - particularly if there is evidence ofcollusive behaviour by the dominant businesses within an industry.The emulation CommissionThe Competition is a public body established by the Competition do work1998. Formerly known as the Monopolies and Mergers Commission, it cameinto being on 1st April 1999The Competition Commission has two main roles- Reporting on referrals made by the Director General of Fair Trading, the DTI and the main utility regulators- Hearing appeals against prohibitions chthonic the Competition Act 1998New legislation comes into force from 1st establish 2000 and theCompetition Commis sion allow hear appeals against decisions made byregulators. Regulators and DGFT will carry out the prohibitions.Regulators have the power to enforce prohibitions and to impose finesof up to 10% of turnover.Prohibitions - These fall into two main categories Anti-competitiveagreements, which include fixing buy and selling prices,limiting production, technical development, investment, sharingmarkets or supply sources and applying unlike trading conditions toequivalent transactions. Abuse of dominant market position ordinarilywhere a firm has over 40% of the market and imposing inequitable purchasingor selling prices.Referrals to the Competition CommissionA be ditch effort if the Director General of Fair Trading cannot refine the problems. Tends to follow the merger business cycle (verystrong at the heartbeat). Agreement can be reached to rectify theoffending area of strife- ITV companies were requested to reduce advertising sales contracts