1. WEEK 10 PRESENTATION BRIEFING B300

2. MODULE 3 – POLICY ISSUES FOR BUSINESS Objectives and Key Themes: To appreciate the rationale for business policy. To recognise the importance of policy for individuals, businesses and nations. To appraise and critically evaluate the link between different theoretical perspectives and policy. To understand selected policy issues in some depth. To place the individual firm within the context of its economic, technological, social and policy environment. To express a considered opinion on policy issues in the light of your reading of the course materials. Demonstrate an awareness of current affairs related to business studies and particularly the area of policy.

3. The reader is divided into 6 sections: Policy: significance and rationale Competition policy Science, technology and innovation policy International trade and investment policy Regional policy Environmental policy Each of these sections will be studied in 2 weeks of your timetable.

4. Policy: significance and rationale Section 1 looks at the subject of policy and explores the rationale for policy intervention in market-based economies.

5. Chapter 3 – Why do we need policy? By Heilbroner and Thurow. This chapter explains why business related policy is necessary in a market economy. It provides an overview of the various reasons for policy making in a market economy.

6. Market failures The authors point out some of the major economic arguments for government intervention in a market economy that goes beyond the fundamental role of governments in maintaining law and order, creating and enforcing property rights, defending national boundaries and waging war. They point out market failures such as the existence of public goods, externalities, information asymmetries, imperfect competition and the inability of markets to cope with very long term and uncertain investments.

7. Market failures continued… Market economies may also be plagued by the unregulated operation of market forces which can generate inequities that may be unacceptable in social justice terms. Some of the market failures may not be failures – as they can potentially yield offsetting benefits e.g. monopolies and oligopolies.

8. Market intervention The existence of market failures does not automatically justify market intervention. I must be demonstrated that the benefit of the intervention exceeds the cost of making it. There is a risk that public officials may not always seek the societal interest – instead furthering their own interest.

9. Market intervention continued.. Even well meaning governments must possess the requisite administrative competences. These can be acquired through an incremental, cumulative and path-dependent process. The core capabilities of governments with respect to policy formulation and intervention my exhibit significant differences.

10. Discussion – market failure Think of some market failures and discuss with your tutor. Has policy been formed to address the market failure?

11. Chapter 4 – Culture, social norms and economics: some implications for policy by Casson. Casson’s chapter is in 2 main parts – “where are we coming from?” and “ where are we now?” It is split into sections and you will do some small sub group work on this chapter.

12. Small group work Divide the section into 11 small subgroups. Each group is to summarise one of the points from chapter 4 from points 2 to 12. The group will then present to the rest of the section to explain their part of the chapter.

13. Activities Activity 1 on page 10 of the policy study guide. Activity 2 on page 13 of the policy study guide.

14. READING TO BE COMPLETED BY NEXT WEEK Please read pages 10-13 of the Policy Study Guide to refresh your study of Chapters 3 and 4 of the Policy Module. Please read Chapters 5 and 6 of the Policy Reader