Notesale: Turn your study into money

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To what extent do you think that the activities of businesses need to be more
regulated by the Government in the future? Justify your answer with reference
to organisations and/or relevant examples of business activities that you know
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Market failure occurs when
resources are inefficiently allocated, because of imperfections in the market mechanism,
resulting in a loss of economic and social welfare
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In this case the scenario refers to market failures such
as imperfect information and the exploitation of monopsony power something the
government should intervene into as its market failure and perhaps in more in ways in the
future
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It should intervene and provide regulation in markets whereby
conglomerate organisations have the ability to use market power to prevent other firms
from competing fairly like a monopoly
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Some firms operate in industries where a vast amount of investment is required
in capital equipment to achieve the minimum efficient scale, and as a result, the number
of new entrants is likely to be low
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Ways to combat this in the form of
government regulation could be to give nearby competitors subsidies so perhaps it could
price lower and reap a greater demand or even to the extent the government could tax the
multinational company greater however that comes with a risk as the company may ‘pack
up’ and set up in another country with lower corporation tax taking away its economic
impact on our economy
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One factor is its
tremendous global brand
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Of course, Amazon’s
traditional rivals have also invested heavily in e-commerce
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It’s a major drag that gives Amazon
another key advantage, making it the largest retailer in America overtaking Walmart with
the company reaping in 25 BILLION pounds in revenue in 2015
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One instance would be to
monitor predatory pricing a feature of an oligopolistic market, whereby the structure of
the market is where the majority of the market is concentrated in the hands of a few large
firms
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As oligopolists grow in
size they can integrate, both horizontally and vertically, forward and backward, to control
the supply of resources and sources of distribution
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The government could provide regulation
that prohibits the formation of the oligopoly in the first place in fact this provision is

already in place
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However it is often
difficult to prove firms are colluding especially if it’s tacit which means they organised it
informally
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However Apple denied that it was involved in price-fixing, accusing plaintiffs of
"false accusations", and is in the process of challenging last July's ruling
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On the contrary the government should only regulate business activities to a minimal
extent as government intervention can sometimes fail to correct instances of market
failure, and can even make existing problems worse
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Government subsidies to
particular industries could distort the proper functioning of markets and lead to
inefficiencies in the economy
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Additionally a decision by the
government to raise taxes on goods such as cigarettes to prevent people from using them
might lead to an increase in attempted tax avoidance, tax evasion, smuggling and the
development of grey markets where trade takes place between consumers and suppliers
without paying tax
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From a US
perspective this could bring harmful affects on their economy more worse so if they
didn’t have such high tax
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48 billion - on $74 billion in overseas
income
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Another reason why governments regulation
on businesses activities should be minimal is because businesses benefit through less
interference in their activities
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This can be a major handicap for firms operating in highly price-competitive
markets where small cost differentials can lead to substantial loss of sales
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Supporters of this laissez-faire approach argue that the UK has been
extremely successful in attracting overseas producers because of the lack of regulation of
businesses
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However the
purpose of raising costs is valid, it enforces safety and prevents losses in jobs and health
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Warehouse staff at the group, which is
controlled by Britain’s 22nd richest man, are required to go through searches at the end of
each shift, for which their time is unpaid, while they also suffer harsh deductions from
their wage packets for clocking in for a shift just one minute late
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50 an hour against the statutory rate
of £6
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