...and Global Business Applications Introduction: The study of government regulation and the competitive environment for business is relevant to all those who study business. All business candidates need to understand how the competitive environment will impact their employers and businesses. Task: Write an essay (suggested length of 2–3 pages) that describes the relationship between regulation and market structures and how regulation affects the market. A. Define industrial (i.e., economic) regulation. Industrial Regulation happens when government commissions regulate the rates or prices of natural monopolies. 1. Explain why industrial regulation exists. In a market structure of perfect competition industrial regulation is not required because there is a lot of competition and this encourages competing industries to make good use of resources, also the price of their goods are determined by the price the market will bear and consumers benefit. Whereas in a monopolistic competition there exists a market structure that could allow competitive monopolies, duopolies, oligopolies, and monopolies to charge higher than competitive prices or the use inefficient use of resources and limited supplies, creating an environment that is not conducive to the benefit of the consumer. . (McConnell, Brue & Flynn, 2012) 2. Explain how industrial regulation affects the market. Industrial regulation affects the market by keeping prices for natural monopolies such as public...
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...ministers by January 1, 2019. The question is, however, whether this is the right path to choose and whether these regulations will be able to prevent the world from any future financial markets crisis. So far, the proposed numbers themselves could hardly be described as tough, as the bounce in bank shares testified. Also, it seems that many important issues are not being addressed at all. (Plenty) But what are the issues that should be addressed? What would be the ideal regulatory state and is it possible to ever achieve it? Let us, first, start with our idea of the “ideal” international financial regulatory plan. After having researched various proposals for the international financial markets regulations, we reached a conclusion that finding the ideal path is going to represent a very difficult task and that none proposed regulation will be able to fit all the states. As mentioned in the article “Financial regulation: More questions than answers” which was posted in Businessline in the end of July, due to the variations in institutional legacies, traditions and systems in individual countries over the world, no one size can fit all. Also, however, we believe that as far as financial stability is concerned within any kind of arrangement that is deemed fit in a particular country, there is no need for a central bank to have a lead role. (Opinion) Any regulations will then require a dispassionate assessment of the reasons for the current system’s failure. The complicated issues...
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...the financial accounting system. In response, the NYSE and the NASDAQ proposed increasingly stringent independence requirements, both for overall board membership and for the compensation and nominating committees. Congress passed the Sarbanes-Oxley Act, a group of amendments to existing securities laws intended to strengthen corporate governance and the financial reporting system. These proposals and laws augment existing exchange requirements for listed firms to have independent audit committees. When costly internal regulations that are not necessary for honest corporations are imposed on all corporations that are competitors, honest corporations do not gain a competitive advantage over those who have violated the law. In some situations these honest corporations could bear higher costs than do rogue corporations. Who then benefits from such rules? First, standardized rules make it easier for the regulators to supervise the corporate subjects of the regulation. Regulators include not only government regulators and examiners but also the internal police within large organizations-that is, compliance officers, comptrollers, and accountants. Second, generally applicable...
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...as ethylene glycol butyl ether). It acts as a degreaser and is a colorless, biodegradable chemical with a fruity odor. It is on lists as being a toxic air contaminant and some animal studies indicate that these chemical produced reproductive problems. People exposed to this contaminant have reported nose and eye irritation, headaches, vomiting, and a metallic taste. However, due to low regulation levels, it is difficult for customers to know if their cleaners contain this chemical because it is not listed on the label. Federal and state governments do not regulate air pollution inside the home. An early cleaning company that branded itself as being nontoxic and environmentally friendly used this chemical in its products but did not label it in order to “protect its formula from piracy.” Companies such as Clorox Co. and S.C. Johnson also use this chemical without printing it on the label. They were able to do so when EGBE was removed from the list of hazardous air pollutants and maintains a guideline of for how to prevent chronic inhalation exposure. However, it is a guideline, not a regulation. Professors at University of California, Berkeley not that the EPA erred when it removed the chemical from the hazardous...
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...Proposed regulation: Georgia Super Speeder Law 1. State the administrative agency which controls the regulation. Explain why this agency and your proposed regulation interest you. -Office of Highway Safety controls this Georgia Super Speeder regulation. This agency and regulation interests me because as a Georgia resident I have seen the damages that speeding on a Georgia highway can cause. I have had colleagues face bad accidents as a result to speeding and this regulation punishes those drivers that break the new regulation. -This law will directly affect me so much as if I was in violation of the law; I can face an additional $200 in the ticket fee just for being in violation. This fee does not include the actual speeding ticket. 2. Describe the proposal/change -The new law will increase the amount of money that an individual pays along with the speeding ticket fee. The proposal is in place to decrease the number of deaths and accidents from the result of driving above the given speed limit. 3. Write the public comment which you would submit to this proposal. Explain briefly what you wish to accomplish with your comment. -I am in favor of the new super speeder regulation. I believe this law will decrease the amount of ‘speeders’ on Georgia highways. Georgia has a high rate of motor vehicle accidents a day and with a new law that will punish these drivers with higher fines, I believe that more drivers will take caution and actually...
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...The Averch-Johnson Effect Economics of Competition and Monopoly 1 Rate of Return Regulation This form of regulation in its purest form takes costs as exogenous and observable and forms prices on the basis of observed costs included and appropriate rate of return on capital. One of the principal criticisms that have arisen for the kind of rate of return regulation practised in the United States is that the incentive for productive efficiency are reduced. In particular the input choice of the regulated firm will be distorted. While this effect is widely quoted there are a number of misunderstandings regarding the nature and significance of the theoretical result and there has been a fairly substantial empirical literature that has questioned whether it is relevant in practice. We will look at the theoretical result to illustrate what it does or does not show and look at the empirical relevance. The key aspect of rate of return regulation is that the principal restriction on the regulated firm is that the rate of return it can earn on capital is restricted to a value s. In order for the firm to be able to finance its operations, secure funds for its investments, the firm has to be able to earn a return equivalent to its cost of capital r. As it is difficult to determine the exact cost of capital and there is a hard constraint that the permitted rate of return should not be less that r the permitted rate s will typically be above r. The usual (and somewhat misleading) statement of the...
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...There are three possible alternatives to address this situation. Let us discuss each alternative one by one. The first alternative is that company issues a warning that the toy is unsuitable for the children and thus, the whistle should be used with caution. The major advantage of this alternative is that it does not result in any financial losses as the toys can be shipped immediately. However, this alternative can attract legal consequences as the toy fails to pass the regulatory standards. Further, it is highly unethical for the company to ship the toys even without warning as it could be harmful for children. It is unethical for the company to ship the product which is unacceptable by US standards to another country, even though the regulations are not stringent in that country as it can harm the children in that country as well. The second alternative to address this issue is to reproduce the product and meet the acceptable limits for lead and repackage it at a cost of $100,000. This alternative will result in numerous benefits. First of all, it will be a ethical decision on part of the company. Secondly, this decision will not attract any legal liabilities and will allow the company to maintain its reputation. However, the disadvantage is that this option will result in financial losses of $100,000 for the company. The third alternative is to ship the manufactured product to a country where such product is legally accepted or meets the regulatory standard. This situation...
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...Executive summary One chalange that firms face nowadays is how to expand in the Multinational market and still maintain their compatitive advantages. The major issue is to decide for a favorable place or location for their new businesses. Due to our multicultural globus, every country has its specific regulations, markets, interrests, labor, trade zones, facilities and other factores that could affect the decision of the foreing expansion and the choice of the industry location. This paper illustrates the major factors that should influence such decisions. There are several types of observations, how to decide for a specific location for a company. This dicision depend strongly on the activities of the company, in other words with what type of business profile this company identifies itself. There are two major categories in our global observation what a company can be. The first one is the firms that have industrial backround, like goods production. Second one is companies that are based on service. This second category is not descused in this paper due to the less importance of the site selection decision, because it doesn’t matter whether the whole business process is situated at the same location. The communication technologie open the facility to be successfully performend even on different continet. In this paper I will be focused on the industrial corporates that is willing to take the decision of locating its factory somewhere in the global/international trade zones...
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...A monopoly is a situation in which there is a single producer or seller of a product for which there are no close substitutes. Economies of scale is the situation in which the cost to a company of producing or supplying each additional unit of a product (referred to by economists as marginal cost) decreases as the volume of output increases.A natural monopoly is a monopoly that exists because the cost of producing the product is lower due to economies of scale if there is just a single producer than if there are several competing producers. If there are multiple firms in an industry that is characterized by natural monopoly, all except the one that can attain the largest volume of output, and thus the lowest production cost, will generally exit the industry because they will not be able to compete on a price basis. Once a single firm becomes established in an industry that is characterized by natural monopoly, it is very difficult for competitors to emerge because of the very high costs for production facilities (including infrastructure) that allow a scale of output equal to or greater than that of the existing monopolist and because of the uncertainty that they will be able to oust the existing monopolist. The most commonly cited examples of natural monopolies are utilities such as railroads, pipelines, electric power transmission systems and water supply systems. Such industries are characterized by very large costs for their infrastructure and it is thus often inefficient...
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...Chapter 3: The Regulation of financial accounting Why examine theories of regulation? Better placed to understand why some accounting prescriptions become part of legislation while others do not. Accounting standard – setting is a very political process While some proposed requirements may be technically sound and logical, they may not be mandated due to political ‘power’ or influence of some affected parties What is regulation? The Oxford Dictionary defines regulation in terms of a “prescribed rule” Macquarie Dictionary defined regulation as “a rule of order, as for conduct, prescribed by authority; a governing direction or law”. On the basis of these definitions can say that regulation is designed to control or govern conduct Hence, when we are discussing regulations relating to financial accounting, we are discussing rules that have been developed by an independent authoritative body that has been given the power to govern how we are to prepare financial statements, and the actions of the authoritative body will have the effect of restricting the accounting options that would otherwise be to an organisation. ‘Free Market’ perspective Accounting information should be treated like other goods, with demand and supply forces allowed to operate to generate an optimal supply. Arguments supporting ‘free – market’ perspective Private economic – based incentives ‘Market for managers’ ‘Market for corporate takeovers’ ‘Market for lemons’ Private economic – based...
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...Natural Monopoly Telephones, Cable, and Broadcasting ___________________ ___________________ TM 584 Natural Monopoly: Telephones, Cable and Broadcasting We all hear the term “monopoly” before. If someone does not know a monopoly is defined as “The exclusive possession or control of the supply or trade in a commodity or service.” However a natural monopoly is a little bit different in meaning from its counterpart. In this paper we will be looking into the question: whether the government should view telephones, cable, or broadcasting as natural monopolies or not; and should they be regulated or not? A "natural monopoly" is defined in economics as an industry where the fixed cost of the capital goods is so high that it is not profitable for a second firm to enter and compete. There is a "natural" reason for this industry being a monopoly, namely that the economies of scale require one, rather than several, firms. Small-scale ownership would be less efficient. Natural monopolies are typically utilities such as water, electricity, and natural gas. It would be very costly to build a second set of water and sewerage pipes in a city. Water and gas delivery service has a high fixed cost and a low variable cost. Electricity is now being deregulated, so the generators of electric power can now compete. But the infrastructure, the wires that carry the electricity, usually remain a natural monopoly, and the various companies send their electricity through the same grid (Fred...
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...much plus 300% interest. That situation possibly created economic crisis for the consumer on the receiving end of the letter so why is it beyond their control to help. Public or private funds affect the well being of the economy and the government basically makes the rules and controls the interest rates of the economy. I believe that when an organization or country receives a bail out the lenders should have control of how and when the funds will be repaid. Recent events give witness to that statement because many American companies were given bail-outs without stipulations as to payback and they handed out large bonus checks to executives while cutting benefits to employees. They ability to dictate policies, rules and governmental regulations, on the other hand, is another greater power that should not be given to the lenders. You can...
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...1. Introduction The telecommunications sector in Malaysia has undergone significant physical and structural transformation in the past fifteen years. Between 1985 and 2000, the country’s telephone penetration rate rose by 540 per cent. Equally importantly, privatization and liberalization of the sector in the 1980s ushered in an era of regulatory reforms and competition in the sector. The market structure as well as the regulatory framework and institutions for the telecommunications sector continue to evolve. The real challenge lies in what to do after that – putting in place adequate regulatory framework and institutions that will ensure industry growth as well as protect consumer welfare. The on-going micro-regulatory reforms in the sector seek to fine-tune the regulatory mechanisms in the sector. This paper reviews the recent history and development of the telecommunications sector in Malaysia. Section 2 provides a brief historical account of the sector and the current structure of the sector. This is followed by a discussion on regulatory reforms in Section 3. Section 4 examines the impact of reforms in the telecommunications sector. Section 5 concludes by discussing the future policy agenda for the sector. 2. EVOLUTION OF INDUSTRY STRUCTURE 2.1. Physical Expansion The infrastructure sector plays a key role in Malaysia’s economic growth and development. The sector’s share of development expenditure in the various five-years plans implemented...
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...Industrial Regulation is the regulation on an entire industry by the government. This form of regulation exists to safeguard industry prices and to prevent the formations of monopolies. One of the key reasons of industrial regulation is to protect the consumer from being taken advantage of. Industrial regulation can affect the market by passing on higher prices to the consumer as a result of higher production costs. Do to the lack of competition in certain industries industrial regulation could lead to x Inefficiency in the market place. This form of regulation could also affect the market by keeping a monopoly in power long after natural monopoly conditions have expired. The regulation of natural monopolies affects the market by protecting consumers from high prices. Regulations are put into place, allowing monopolies to receive fair profits and returns on their business enterprises. The entities that are affected by industrial regulation in terms of market structure are natural monopolies and oligopolies. Natural monopolies are affected by industrial regulations through perfect competition. When you have monopolies new business are not allowed into the industry and with the firm that has the industry monopolized that one firm is the consumer’s only option. The other market structure affected is by industrial regulation is the oligopoly. Oligopoly is a group of a few large firms controlling an industry. Regulations affect this market structure by deterring the firms within...
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...Gun control has been a debated issue especially after the events that have transpired in the past year in our nation. Many believe that if there are stricter regulations for guns that violence will be reduced traumatically. The constitution states "A well regulated Militia, being necessary to the security of a free State, the right of the people to keep and bear Arms, shall not be infringed." This gives the American the right to own a weapon. Of course this was written in the beginning of our country and times have changed. These days you cannot use it for unlawful use. Not saying that people will not use them unlawfully because it has happened in the past year and many are now trying to eradicate guns on a national scale. If our beloved country decided to remove the right to bear arms, the effect would be, if anything, negative. The people who want guns for illegal purposes would discover ways to get them, while the rest of us would have no way to protect ourselves against them. Our country should continue to have the right to bear arms. I believe that stronger restrictions should be made. I believe that every state should regulate the gun laws in their prospective state but on a federal level restrict what type of weapons should be allowed for sale. For example on the federal level the laws would regulate that assault rifles would only be used by our military and law enforcement. I used assault Rifles as an example because we are not in a state where we have militias like...
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