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

Predict the Impact on Organisation and Consumers of judicature Policyon IndustryThe governments industrial policies seek to have an usurpation onorganisations and consumers. The government has a wide range ofpolicies effecting three areas- Monopoly- Privatisation- localisation of function of industryMonopoly and Restrictive PracticesMonopoly antecedent may transcend to consumers being exploited for example,prices charged above the true marginal cost of supply - lead toexcess profits being made by suppliers in the market. Monopoly powercan also lead to lower quality output of goods as the protectedposition of monopolist means that there will be a lack of incentive toimprove goods. Because of the potential economic benefit loss arisingfrom the exploitation of monopoly power, the Government regulates somemonopolies. Regulators can control yearly price increases andintroduce fresh competition into particular industries. In harm ofregulation of monopoly the government attempts to prevent operationsthat are against the public matter to - so called anti-competitivepractices.Problems occur when the market structure in a assumption industry becomesmonopolistic e.g. if a merger or a take-over causes a firm to supplymore than 25% of the market output (defined as a working monopoly).The controversy missionary work investigates mergers. Oligopolies can alsolead to market failure - particularly if there is evidence ofcollusive demeanor by the dominant businesses within an industry.The disputation CommissionThe Competition is a public body established by the Competition Act1998. once 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 theatre director General of Fair Trading, the DTI and the main utility regulators- Hearing appeals against prohibitions under the Competition Act 1998New legislation comes into force from 1st March 2000 and theCompeti tion Commission will hear appeals against decisions made byregulators. Regulators and DGFT will comprise 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 acquire and selling prices,limiting production, technical development, investment, sharingmarkets or supply sources and applying different business conditions toequivalent transactions. Abuse of dominant market position normallywhere a firm has over 40% of the market and imposing unfair purchasingor selling prices.Referrals to the Competition CommissionA last encroach effort if the Director General of Fair Trading cannotremedy the problems. Tends to check the merger business cycle (verystrong at the moment). treaty can be reached to rectify theoffending area of conflict- ITV companies were pass on to reduce advertising sales contracts