GOVERNMENT REGULATION Chapter 28. Why does government need to regulate (i.e. pass laws to control the free market)? Brainstorm Anti- competitive practices.

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Presentation transcript:

GOVERNMENT REGULATION Chapter 28

Why does government need to regulate (i.e. pass laws to control the free market)? Brainstorm Anti- competitive practices and/ or restrictive trade practices E.g.   prices  Restricting consumer choice; e.g. exclusive retailing   barriers to entry; e.g. predatory pricing, advertising  Market sharing; e.g. getting started (read it)

How can governments promote competition? Brainstorm  encourage small firms; e.g. provide start up funds, provide information (Business Link UK),  taxesBusiness Link UK   barriers to entry; e.g.  legal barriers, such as bus services in UK  Introduce anti-competitive legislation (set of laws) 1. Fair Trading Act 1973; monopoly = 25% or >, set up Office fair Trading (OFT) 2. Competition Act 1998 outlaws restriction of trade, e.g. cartels, agreements, set up Competition Commission

The Office of Fair TradingThe Office of Fair Trading (OFT)  set up to protect consumers & ensure competition Functions; 1. enforcement of Competition laws 2. enforcement of Consumer Protection laws 3. Investigates & recommends * Task; find an example case of anti-competitive practices in UK or elsewhere

The Competition Commission The Competition Commission (CC)  main role is to investigate mergers  If CC finds that a merger  competition too much it can stop the merger or set out conditions for it  centre/latest-news/2012/May/cc-to-investigate- metal-packaging-coatings-merger centre/latest-news/2012/May/cc-to-investigate- metal-packaging-coatings-merger

Regulatory bodies  to check prices & practices of privatised monopolies Examples  Ofwat (the office of Water Supplies)  Ofgem (the Office of Gas & electricity)  Orr (the Office of Rail Regulator)  Ofcom (the Office of ‘have a guess’)  Do Q2 P126

Government influence on firms’ location (Regional policy) Why would governments do this?  because different areas of countries are not equal & some need help with; 1. Unemployment 2. Congestion (overpopulation, traffic) 3. Income inequality  by using the data on P127 assess which UK areas need assistance and what type?

Measures to influence firm location  Assisted areas –areas (UK)with certain problems (1- 3 last slide) & eligible for support (grants for investment) Assisted areas  Regional Development agencies (RDAs); promote economic development, business efficiency, employment & sustainable development  EU structural & cohesion funds; funds for promotion of human resources, helping disadvantaged areas, strengthening cohesion in EU * try Exam Practice

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