Competition

Competition

Introduction

The existence and function of any market economy is not possible without government regulation. Uncontrolled market processes are destructive to society and nature. Therefore, the market economy more than any other, needs to be regulated. This paper has attempted to highlight some of the regulations in the competition and market economy (Gies, 2010).

A. Industrial (i.e., Economic) Regulation

Economic regulations are the arrangements by which the government intervenes in the market to fix prices or production quantities, or to establish technical specifications and general restrictions to be met by citizens and businesses to participate in a market (John, 2000). Generally, this type of regulation are set relatively concentrated markets or characterized by network economies. Economic regulation refers to restrictions on price, quality and Conditions of entry and industry-specific output due to:

Negative effects of monopolization

Anticompetitive Practices

Search distributive justice

Indirect effects or externalities

Inadequate availability or failures in service continuity

Following are some of the instruments for industrial regulation:

Price control

Quality Controls

Controls input and output markets

Amounts controls

Supply of goods and services not provided

By private agents

Redistribution

The regulation may increase transaction costs and reduce competition, affecting productivity growth, efficiency, capital formation and technological innovation, leading to higher prices for the end consumer (Gies, 2010).The competition may provide incentives for innovation and makes companies adapt their goods and services to the needs of consumers, without neglecting the quality of them. The regulation, by design, interferes with the price and investment decisions of firms often can increase or decrease the barriers to entry into an industry, restricting competition in one form or another (Lawrence, 2010). The entities that are affected by industry regulation oligopoly, monopolies and perfect markets. Under this regulation the suppliers have an authority to establish the commodity price and can set any price. That is the point where regulations from industry come in. the regulations prevent oligopolies and monopolies to charge unfair prices of the products.

B. Social regulation

Social regulation includes provisions that seek to protect the environment and human health, animal and plant health, and to establish conditions for the exercise of professions and labor relations. Social regulation exists in order to ensure the efficient functioning of markets, generate legal certainty, ensuring property rights, prevent imminent harm or mitigate or eliminate existing damage to the health or welfare of the population, animal and plant health, the environment, natural resources or the economy. Therefore, the regulations are the rules or regulations issued by the government to ensure social benefits (Lawrence, 2010). The concept of social group lies within the social relations closed or limited to the outside, so the social group and someone who has a legal system shall ensure compliance. The process of institutionalization begins with the social group, the regulation on access to the reports. The formation of political association is a process that binds social groups, territorial power (Lawrence, 2010). Social regulations has effect on almost all the entities and protect the interest of public for instance; safety, social cohesion, health and ...