The Monopolies And Restricted Trade Methods Act Economics Essay
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Monopoly and efficiency
Surpluses and deadweight loss produced by monopoly price environment
The price of monopoly is after every celebration the highest which can be got. The natural price, or the price of free competition, on the contrary, is definitely the lowest which is often taken, not upon every occasion indeed, but for any kind of considerable time jointly. The one is usually upon just about every occasion the highest which can be squashed out of the purchasers, or which it is expected they will consent to give; the other may be the lowest that the sellers can easily commonly manage to take, as well as continue their particular business
Based on the standard unit, in which a monopolist sets just one price for all consumers, the monopolist will sell a lesser volume of goods in a higher price than would corporations by ideal competition. As the monopolist eventually forgoes deals with consumers who benefit the product or perhaps service much more than its cost, monopoly pricing makes a deadweight loss referring to potential gains that went not to the monopolist nor to consumers. Offered the presence of this deadweight damage, the put together surplus pertaining to the monopolist and customers is automatically less than the entire surplus received by customers by ideal competition. Exactly where efficiency is definitely defined by total benefits from operate, the monopoly setting is less efficient than perfect competition.
It is often contended that monopolies tend to become less useful and less ground breaking over time, becoming complacent, since they do not have to be efficient or perhaps innovative to compete in the marketplace. Sometimes this kind of very lack of psychological performance can boost a potential competitor’s value enough to get over market entrance barriers, or provide motivation for analysis and expense into new alternatives. The idea of contestable markets argues that in a few circumstances monopolies are forced to behave as in the event that there were competition because of the likelihood of losing their particular monopoly to new traders. This is very likely to happen every time a market’s limitations to access are low. It might become because of the supply in the long run of substitutes in other market segments. For example , a canal monopoly, while worth a great deal through the late eighteenth century Uk, was really worth much less during the late 19th century because of the introduction of railways instead.
Globalisation Personal Trade Dissertation
increasingly connected with each other as a result of massively increased control and cultural exchange. Globalisation has increased the availability of goods and services. The greatest companies are no more national organizations but international corporations with subsidiaries in many countries. Globalisation continues to be taking place for hundreds of years, although has speeded up substantially over the last half-century. Globalisation offers resulted in: improved international trade a company with more than one country greater
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Modern Taiwanese law has been heavily influenced by European civil law systems, particularly German and Swiss law. The Civil Code in Taiwan contains five books: General Principles, Obligations, Rights over Things, Family, and Succession. The second book of the Code, the Book of Obligations, prov
The Consumer Protection Law (CPL) in Taiwan, as promulgated on January 11, 1994, and effective on January 13, 1993, specifically protects the interests and safety of customers using the products or services provided by business operators. The Consumer Protection Commission of Executive Yuan serves as an ombudsman supervising, coordinating, reporting any unsafe products/services and periodically reviewing the legislation.
According to the Pacific Rim Law & Policy Association and the American Chamber of Commerce, in a 1997 critical study, the law has been criticized by stating that although many agree that the intent of the CPL is fair, the CPL’s various problems, such as ambiguous terminology, favoritism towards consumer protection groups, and the compensation liability defense, must be addressed before the CPL becomes a truly effective piece of legislation that will protect consumers
Price Maker: Decides the price of the good or product to be sold.
Single seller: In a monopoly there is one seller of the good that produces all the output. Therefore, the whole market is being served by a single company, and for practical purposes, the company is the same as the industry.
Price Discrimination: A monopolist can change the price and quality of the product. He sells more quantities charging less price for the product in a very elastic market and sells less quantities charging high price in a less elastic market.
Profit Maxi miser: Maximizes profits.
High Barriers to Entry: Other sellers are unable to enter the market of the monopoly.
Sources of monopoly power : There are three major type of barriers to entry; economic, legal and deliberate. Monopolies derive their market power from barriers to entry circumstances that prevent or greatly impede a potential competitor’s ability to compete in a market.
Economies of scale: Monopolies are characterised by decreasing costs for a relatively large range of production If for example the industry is large enough to support one company of minimum efficient scale then other companies entering the industry will operate at a size that is less than MES, meaning that these companies cannot produce at an average cost that is competitive with the dominant company. Finally, if long-term average cost is constantly decreasing, the least cost method to provide a good or service is by a single company. . Furthermore, the size of the industry relative to the minimum efficient scale may limit the number of companies that can effectively compete within the industry. Monopolies are often in a position to reduce prices below a new entrant’s operating costs and thereby prevent them from continuing to compete. Decreasing costs coupled with large initial costs give monopolies an advantage over would-be competitors.
Economic barriers: Economic barriers include economies of scale, capital requirements, cost advantages and technological superiority.
Capital requirements: Large fixed costs also make it difficult for a small company to enter an industry and expand. Production processes that require large investments of capital, or large research and development costs or substantial sunk costs limit the number of companies in an industry.
Technological superiority: One large company can sometimes produce goods cheaper than several small companies. A monopoly may be better able to acquire, integrate and use the best possible technology in producing its goods while entrants do not have the size or finances to use the best available technology.
No substitute goods: The absence of substitutes makes the demand for the good relatively inelastic enabling monopolies to extract positive profits. A monopoly sells a good for which there is no close substitute.
Control of natural resources: A prime source of monopoly power is the control of resources that are critical to the production of a final good
Network externalities: The use of a product by a person can affect the value of that product to other people. This is the network effect. This effect accounts for fads and fashion trends.It also can play a crucial role in the development or acquisition of market power. The most famous current example is the market dominance of the Microsoft operating system in personal computers. In other words the more people who are using a product the greater the probability of any individual starting to use the product. There is a direct relationship between the proportion of people using a product and the demand for that product.
In addition to barriers to entry and competition, barriers to exit may be a source of market power. Barriers to exit are market conditions that make it difficult or expensive for a company to end its involvement with a market. Great liquidation costs are a primary barrier for exiting. Market exit and shutdown are separate events. The decision whether to shut down or operate is not affected by exit barriers. A company will shut down if price falls below minimum average variable costs.
Understanding Unfair Trade Practices
Unfair trade practices are commonly seen in the purchase of goods and services by consumers, tenancy, insurance claims and settlements, and debt collection. Most states’ unfair trade practices statutes were originally enacted between the 1960s and 1970s. Since then many states have adopted these laws to prevent unfair trade practices. Consumers who have been victimized should examine the unfair trade practice statute in their state to determine whether they have a cause of action.
Unfair trade practices are commonly seen in the purchase of goods and services by consumers, tenancy, insurance claims and settlements, and debt collection.
In the United States, unfair trade practices are addressed in Section 5(a) of the Federal Trade Commission Act, which prohibits unfair or deceptive acts or practices in or affecting commerce. It applies to all individuals engaged in commerce, including banks, and sets the legal standard for unfair trade practices, which may be deemed unfair, deceptive, or both. Below are lists of unfair and deceptive practices as per the rule:
What is MRTP ACT
The Monopolies and Restrictive Trade Practices Act, 1969, aims to prevent concentration of economic power to the common detriment, provide for control of monopolies and probation of monopolistic, restrictive and unfair trade practice, and protect consumer interest.
Monopolistic trade practice is that which represents abuse of market power in the production and marketing of goods and services by eliminating potential competitors from market and taking advantage of the control over the market by charging unreasonably high prices, preventing or reducing competition, limiting technical development, deteriorating product quality or by adopting unfair or deceptive trade practices.
Causes of Monopoly
Monopolies can arise in some circumstances as the result of normal business practices that are characteristic of firms in a highly competitive industry. Or they can arise as a consequence of what economists term anti-competitive practices, that is, behavior that is intended to destroy competition through means other than competing on the basis on price and quality (including the quality of services associated with the product). More specifically, monopolies can arise in any of the following, non-mutually exclusive, ways:
(1) By developing or acquiring control over a unique product that is difficult or costly for other companies to copy. This can occur as a result of a purchase, merger or research and development. An example is pharmaceuticals, which can be extremely expensive and risky to develop (and which are also protected by patents), thereby locking out all but a few large, well funded companies with ample talent. Closely related to this is control over a unique input for a product, such as a unique natural resource.
(2) By having a lower production cost than competitors. This can result from having a more efficient (i.e., more output per unit of input) production technique or from having access to a unique source of low cost inputs (e.g., a mine containing exceptionally high grade ore). In some cases, a greater efficiency is the result of economies of scale, which means that the production cost per unit of product declines as the volume of output increases due to the ability to use some resource more intensively (e.g., a steel mill or railroad with lots of excess capacity).
This category includes natural monopolies. A natural monopoly exists for a product for which there are sufficient economies of scale such that the product can be produced or supplied by a single company at lower cost than by multiple, competing companies. Examples include utilities such as railroads, pipelines, electric power transmission systems and wired telephone systems. It is often wasteful (for consumers and the economy) to have more than one such supplier in a region because of the high costs of duplicating the infrastructure (e.g., parallel railroad networks in a region or two sets of telephone wires to every house).
In India, consumer protection is specified in The Consumer Protection Act, 1986. Under this law, Separate Consumer Dispute Redress Forums have been set up throughout India in each and every district in which a consumer can file his complaint on a simple paper with nominal court fees and his complaint will be dec >The procedures in these tribunals are relatively less formal and more people friendly and they also take less time to dec >when compared to the years-long time taken by the traditional Indian judiciary. In recent years, many effective judgments have been passed by some state and National Consumer Forums.
Indian Contract Act, 1872 lays down the conditions in which promises made by parties to a contract will be legally binding on each other. It also lays down the remedies available to aggregate party if the other party fails to honor his promise.
The Sale of Goods Act of 1930 act provides some safeguards to buyers of goods if goods purchased do not fulfill the express or implied conditions and warranties.
The Agriculture Produce Act of 1937 act provides grade standards for agricultural commodities and livestock products.It specifies the conditions which govern the use of standards and lays down the procedure for grading, marking and packaging of agricultural produce. The quality mark provided under the act is known as AGMARK-Agricultural Marketing.
The United Kingdom, as it is still a member state of the European Union, is bound by the consumer protection directives of the European Union;res >Domestic (UK) laws originated within the ambit of contract and tort but, with the influence of EU law, it is emerging as an independent area of law. In many circumstances, where domestic law is in question, the matter is judicially treated as tort, contract, restitution or even criminal law.
Consumer Protection issues are dealt with when complaints are made to the Director-General of Fair Trade. The Office of Fair Trading will then investigate, impose an injunction or take the matter to litigation. However, consumers cannot directly complain to the OFT. Complaints need to be made to the Citizens Advice Consumer Service (which has taken over from Consumer Direct) who will prov >Many of the consumer protection laws e.g. Distance Selling Regulations 2000 or Unfair Terms in Consumer Contracts Regulations 1999 (20 years ago) are actually UK implementations of EU directives. The OFT is one of the bodies responsible for enforcing these rules. It leads to a problem that these examples of legislation are clearly designed to deal with individual complaints but the OFT will only deal with systemic complaints and will ignore individual complainants redirecting them back to Consumer Direct.
The Office of Fair Trading also acts as the UK’s official consumer and competition watchdog, with a remit to make markets work well for consumers, and at a local, municipal level by Trading Standards departments. General consumer advice can be obtained from the Citizens Advice Consumer Service or via a local branch of the Citizen’s Advice Bureau.
On the 3rd September, Conservative MEP Daniel Dalton proposed plans to the European Parliament’s Internal Market and Consumer Protection Committee to introduce an App that would prov
Regulations for Good, Balanced and Competitive Organization Practice Composition
intend to assure fair and balanced competitive business techniques. However , there are times when some businesses can do anything to gain competitive advantage. USA provides strong antitrust laws that prohibit correcting market price, cost discrimination, conspiring boycott, monopolizing, and adopting unfair organization practices. A history of Antitrust laws dates back to 90 when Congress passed Sherman Act. In 1914, Our elected representatives passed two more acts: Federal Control Commission Work, and Clayton Act. With some revisions
Dissertation Trade Policy
TRADE POLICY I. International Trade A. The Balance without Control 1 . Devoid of Trade: If there is no control, the domestic price for the reason that market will certainly balance supply and require (Figure 1). 2 . With Trade: a. If the govt allows transact, what will happen to the price with the commodity plus the quantity sold in the home-based market? w. Who will gain from control, who will lose, and will the gains exceed the losses? c. Should a tariff (a tax about imported commodity) be part of the new
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