Essay On Market Structures
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The training regarding the regulations made by the government and the very competitive environment is very crucial to all those who are studying business. Regulation means the rule control of an aspect. This essay is determined to explain the relationship existing between market structures and regulations and the effect they have to the market. The main aim that this essay will dwell on is the anti-trust laws. Industrial regulations relate to the regulations the government issues over firm’s rates, or prices within various industries.
This type of regulations exists as a way of diminishing monopolies or as a way of organizing them. Firms that have been regulated are said to have a less incentive than firms, which are competitive in reduction of costs (Spencer, 2000).
Firms that operate within the oligopoly and monopoly structures of markets are said to maybe fall if they are put under the observant judgments of the regulatory statutes. Social regulations, put and created by the government, are meant to regulate the way goods are produced, the goods physical characteristics, and the effect of consumption and production of goods towards the society. This regulation is used as regulations to all industries. As explained by McConnell, Brue, & Flynn, (2012), social regulation often commands a product design, employment condition, production process nature.
A. Summarize the four major pieces of legislation collectively known as the Antitrust Laws.
There are laws set by the government as a way of regulating commerce and trade by averting price fixing, unlawful restraints, and monopolies as a way of promoting competition, encouraging quality production of services and goods, at prices, which are low with the main goal of protecting the public welfare by making sure that consumer demands are met by the manufacturers and the sale of goods at the most reasonable prices.
Antitrust laws are set to ensure that businesses have fair competition. There are various antitrust laws, formed as a way of ensuring that competition and customer satisfaction is satisfied. One of the antitrust laws includes the Sherman act amended in 1890. This is the law that has set basis for the other acts. The others include the Clayton act amended in 1914, Robinson-Patman act amended in 1936, and the federal trade commission amended in 1914 (VanHoose, 2010).
These laws are amended with a motive of ensuring that there exists competition, which is fair and that customers and consumers get what is of quality and at fair prices. These laws are designed in a way to help avert issues like monopolies formation, mergers between various companies, and cooperation that are illegal between companies that are competing. These are the issues that make it possible for antitrust to regulate the market.
B. Discuss the intended purpose of industrial (i.e., economic) regulation as it applies to the following market structures:
Oligopoly is the market structure, where there are a few firms that control the market. Oligopoly is a market structure, where there can lack multiple suppliers, thus competition can be very high leading to consumers facing high prices. This is an aspect that makes it possible for regulation. Since there are few companies, it is also necessary to take into account the aspect that these companies need to be monitored and how they react to any arising change. Industrial regulation is advantageous as it helps in fair prices imposed to the customer (Spencer, 2000).
Monopoly is a structure of the market where one producer is said to have control of all product supplies. Any entry by new producers is limited or prevented. As a result of this fact, regulation is necessary in this market as the companies in place tries as much to protect their product. This is an aspect that the government controls with a motive of ensuring that consumers will not be price takers (VanHoose, 2010).
C. Explain the major functions of the three primary federal and state regulatory commissions that govern industrial regulation.
The FERC is a regulation commission set and commissioned by the government, and it dates back to 1920. This commission is assumed with the aspect of regulating electricity prices all over the country. This commission is said to have control and regulations of oil pipelines, natural gas industry, and electricity wholesales rate, and hydroelectric projects.
This commission is able to regulate about 73% of the total electricity used in the US. This commission is also accredited with the licensing and inspection of private hydroelectric projects (Harris, 2006). This commission is also accredited with the monitoring of energy markets. The other state regulatory commissions are also involved with the regulation of the environment and the health of the citizens.
D. Discuss the intended purpose of social regulation as it applies to all market structures.
The aspect of social regulation is very important to any industry. Firms are said to be regulated with a motive of ensuring that the markets remain more competitive. Firms that operate within the oligopoly and monopoly structures of markets are said to maybe fall if they are put under the observant judgments of the regulatory statutes. Social regulations, put and created by the government, are meant to regulate the way goods are produced, the goods physical characteristics, and the effect of consumption and production of goods towards the society. This regulation is used as regulations to all industries (Spencer, 2000).
E. Explain the major functions of the five primary federal regulatory commissions that govern social regulation.
The FERC commission is presumed with the aspect of controlling electricity prices all over the country. This commission is said to have control and guidelines of oil pipelines, natural gas industry, and electricity wholesales rate, and hydroelectric projects. This commission is able to control about 73% of the total electricity used in the US. This commission is also presumed with the licensing and inspection of private hydroelectric projects. This commission is also attributed with the monitoring of energy markets (Harris, 2006).
Harris, C. (2006). Electricity markets: Pricing, structures and economics. Hoboken, NJ: John Wiley & Sons.
McConnell, C. R., Brue, S. L., & Flynn, S. M. (2012). Economics: Principles, problems, and policies. New York: McGraw-Hill/Irwin.
Spencer, P. D. (2000). The structure and regulation of financial markets. Oxford: Oxford University Press.
VanHoose, D. D. (2010). The industrial organization of banking: Bank behavior, market structure, and regulation. Berlin: Springer.