TOPIC: FOR GRADE 10B_NEW
Government should play more active role in implementing the policies maintained by Monopolies Restrictive Trade Practices Act. Discuss.
Time Duration for submitting the Article is
February 18 to 24, 2013
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Government is the one who sets rules and regulation in a country. Monopolies Restrictive Trade Policies Act simply aims to prevent monopolies or to control the monopolies, also to prevent unfair market practices and protect consumer's interest. Monopolistic trade practice is a strategy represents eliminating potential competitors from market and taking advantage of the control over the market by charging high prices and preventing or reducing competition which later turn out become a monopolies.
ReplyDeleteWe know that governments are supposed to control the monopolies in the market. However are all monopolies bad? Economies of Scale might also be applicable? Aren't the consumers would get benefits from it? Wouldn't government earn more revenue?
Some monopolies can benefit their consumers because of their size and ability to earn profit. It isn't all bad as monopolies would cut their prices as low as they want because they feared consumers would run to the new firms and start losing consumers. For example a monopolistic company sells salt in a monopolistic market, then a new entry comes and sells salt for lower prices. The monopolistic company would soon cut their prices so they won't lose consumers and still can cover up their losses with profit they have earned from monopoly.
Economies of Scale is one of the natural barriers of scale and simply means increasing in size reducing average cost of each producing output below the normal costs. With the reducing of average cost company might get more profits and eventually exceed from expected profits. By doing so it can prevent wasteful competition as they are the monopolistic company, why would product duplication and wasting resources? For example the supplier of gas, Pertamina. Why would create another gas product if people would rather choose Pertamina and it would waste the natural gas resources. Pertamina creates gasses with reduced costs as they make it in a large measure and refilling the gas tank and not creating it again.
Then yes of course, consumers would be benefited. Why? The reason is that the abnormal profits that the monopolistic company has may use to do another research and development and invented something new which would satisfy consumer needs and wants. For example, Apply have a monopoly on iPhone with the slide-unlock features. With all the profits they have, they started to develop the iPhone to a newer stage and satisfy consumers.
Government got more revenue? Why not? As profits of monopoly firms are increasing drastically, government can get more revenue from the taxes. For example, a company increase in profits and eventually government would set taxes. Like 10% tax on goods, which then paid by the company indirectly from consumers to government.
So, monopolies are not only about large monopoly firms will try to restrict competition or exploiting consumers. There are good sides of it which should concerned first. Consumers, government and company or producers would get benefited from this. This means that government is not necessary to play an active role implanting the Monopolies Restrictive Trade Practices Act.
Dear Students,
ReplyDeleteI See only the leonardo's work on the blog even the last date has elapsed long back.
Why I should not give you zero for this assignment please write?
BipinKala
Monopoly is when there is a person, enterprise that only the suppliers of particular commodity. Government should make a policies for powerful firm or the only supplier to not do monopoly , because
ReplyDeleteFirst , for the powerfull firm they can do oligopoly , big firm is full of power they can control most of market , so it will be hard for small company to develop or maybe the powerfull firm will try to kick them out from the market , because usually big firm is using many labour, so there will be less labour available for small firm that will hamper the production of small firms , or big firm usually beneficial from economic of scale so they will need many natural resources due to decrease the production so that can causes the harmful for environment and also will hamper the small firm to growth for example like coca -cola produce many products so they will need many resources and they can harmful the environment , and also nowadays many soft drink company hard to enter the market and compete with coca -cola because of their history , and their company is really big .
Second monopoly can make the entry barriers for new business to enter the market, because their size of business really contrast , example the big firms can threaten their suppliers to not supply their products to other small company , of course the suppliers will not supply the resources again to other small firms , because the big company usually order in big amount than the small companies that case can happening when there are only several suppliers in that country .
Third if that in that country there’s monopoly means they can kick out small and other companies to get out from the market , it means government taxes will go down because there’s only the big and powerful firms left over meanwhile another companies already bankrupt , so government will collect the taxes from left over companies , if the government taxes is falling means the government subsidies will be lesser too , so it will be impact to the poor people this case is happening where there are many firms and several of them are big.
Fourth this case is happening when there is only the supplier in that country consumers will have lesser choice , because that company don’t have any company to compete with it means they are not motivated enough to make the innovation or to make the improvement of their products, or maybe they will make the products arbitrarily so their quality is not good enough , or they can set the price really high because they don’t have any competitors so their consumers demand will be price inelastic , so the consumers will be force to buy in high price and bad quality for example like PLN , the electricity company , they don’t have any competitors.
So the government should make the policies for big firm to not do the monopoly because it will be bad for other , so they can do healthy competition concept and price leadership to avoid monopoly.
Monopoly market power sets it apart from competitive companies. Market power is the ability of the company to influence the market price. A firm in a competitive market does not have the ability to affect the market price because it holds a small market share and can easily be undercut by other companies. Monopoly exists when there is one company in the industry, it can change the output to directly influence the market price. Monopoly is a situation where one company or group has all or nearly all the market for any type of product or service.
ReplyDeleteWith the existence of a monopoly in the country could have a negative effect for the company there. Small companies can usually feel the negative impact of the monopoly. This monopoly could hurt small companies because large companies that dominate the market, they can do a monopoly and small companies going out of business. Monopoly can also harm society in the country as a small company is out of business and there is no competition in the market that can affect the price of goods and services in the country. If there is no competitor in the market that can affect the innovation made by the company. If there is no new innovation for goods and services, the customer has little choice of goods and services. Monopoly also make the economy of the country is going. If it's a small company out of business then the unemployment rate in the country will increase and cut consumer surplus and economic welfare. If the company has the power in their market that will be in charge of the market and they can limit production released to the market that can create scarcity of goods in the market and affect the price of the goods will increase. Government can and must set up strong regulations to expect the negative impact of this monopoly. Government can raise taxes for companies large and small to help companies survive in the monopoly of the big company. Government makes rules to help small firms to survive in the market.
But the advantage with a monopoly in a country is the monopoly can make high profits, it can be used to fund capital expenditure investment costs are high. Companies that dominate the market can lower the production cost of the goods, if they dominate market and the absence of competition, it means that customers have to buy products from the company. If the demand of the company was increased and resulted on the production of the company and they have to manufacture products on a larger scale. if they are produced on a large scale it means they can cut the cost of production or economies of scale. Economy of scale is very important for companies with high fixed costs. Company can also cut the risk of over production because no matter how much they produce will be purchased by the customer because there is no competition. The company also controls the price in the market and they are the only manufacturer that produces it. Benefit to the state is also no exploitable natural resources and human because not many companies that compete with the monopoly.
So with a monopoly in the country could be affecting small businesses and an increase in the price of the product is due to the absence of competition in the market that can be harmful to customers. Companies that dominate the market can cut the scale of their production to the market to get a lot of profit. Therefore the Government should help small firms to survive in the market and improve the welfare of the people in the country by making regulations to discuss the country's monopoly.
Monopolistic trade practice is practices by using their market power to eliminate/remove potential competitor from market. And enjoy the advantage of control over the market by charging unreasonably high prices, prevent the competition, limiting technical development, adopting unfair production/trade practices. Restrictive trade practice is any practices which tend to restrict the flow of capital into the production. It may also manipulate the prices or condition of delivery to influence the flow of supplies in the market which lead to unjustified cost. Many governments try to regulate the monopoly in the markets by introducing laws to protect small firms and consumers from exploitation, however some monopolies in the market bring some benefit.
ReplyDeleteFirst, monopoly may be more efficient than smaller firms supplying similar products because of its scale of production. Since monopoly is done by firm who has large market share and a big firm. Their productions are large scale production which bring greater economies of scale. It will reduce the average cost as the production scale increase. As their costs are lower, they may reduce the prices of goods and services which will benefit the consumers.
Second, monopoly companies may still compete with firms overseas. Firms will compete with overseas firms to expand their market size to larger area/more countries. Example : Market leader for noodles in Indonesia, Indomie. It still compete with other companies overseas. Monopoly companies may also compete with firms selling products and services that satisfy similar wants. Example : provider of air or railway services could still compete on some routes from providers of bus, coach, or boat services. They may also compete with companies that produce close substitute product, example : Coffee company may compete with tea company, margarine company may compete with butter company.
Third, monopoly may still charge low competitive prices and offer high quality products because they afraid new firms will be attracted to enter the market by the high price that set by the firms. If the firm set the price too high, some new firms may be attracted as they can produce and sell same/similar goods and services with cheaper prices, same also happened to the quality. The low price and high quality will then benefit the consumers.
Fourth, monopoly companies may invest some of their profit in new invention/research and development of better products as their profits that they could earn from this invention will not be competed away. Since monopoly companies earn 100% of total sales in the market, they are having large profit. The profits are allocated to do research and development of goods and services with will bring new high quality/technology products. It will benefit the consumers as they can enjoy high quality product.
Fifth, competition is wasteful. As they are producing and competing of similar product, they will produce product that has similar level of satisfaction to the consumers. Some consumers are loyal to some brands and some of consumers trust to the well-known firms instead of new firms. And later the product that has been produced by the new firms become waste as it is not demanded in the market. It brings waste of natural resources, work-force and time. Example : Apple are producing the first tablet, and the other small firms are following Apple to produce tablet. Small firms may can’t produce as good as Apple, and later it is not demanded by the market and it becomes waste.
So the conclusion is, Monopolies are not always bring negative effects to the economy, it also brings some benefit to the economy. As there are no competitions in the market.
Charles 10BN
Monopoly is a condition where a firm dominates the market because of their power to control and be the leader in the market. A firm dominates when it is having high percentage of revenue, consumer’s trust and loyalty, and when the firm’s product is very demanded in the market. Only huge firms can monopoly a market because they have more experience in the market and have more dominance basically. A monopolistic trade is used by dominating firms to eliminate a competitor of their own in the market. By doing this, the winning firm can charge overly high prices, producing goods according to what they want, reducing the quality of the products to decrease cost of production in order to increase their revenues and prevent any competitors to compete against them in the market. The government should be more active in the monopolistic market because they have higher dominancy than the dominant firm itself. Government controls the economics of the country and has high impact to the monopolistic market.
ReplyDeleteIf a monopoly happens, consumers will be outsmarted by the dominant firm. By setting high prices and having no other choice, consumers will have to spend more. While if there is no monopoly, prices will be set according to the market’s demand and consumers will be more satisfied with the prices of goods.
The role of government will be highly appreciated and useful because a firm that is has dominance in the market can reduce the quality of products in order to decrease cost of production. By doing this, they can increase their revenues and profit. The consumers’ not knowing is very dangerous and unfair. This is called unhealthy and unfair production.
Small or new firms in the market will have less power. They will have to spend more on advertising, producing new and improved goods, research and development, and attracting consumers of the dominant firm. Although it is almost impossible, they need to do this in order to stay in the market. If they walk out of the market, the dominant firm will have more power in the market with one less firm out. They will have to win consumers to buy their product otherwise they will end up in bankruptcy thanks to the dominating firm.
Consumers will have less choice in a particular product that a firm is dominating, because only one firm in the monopolistic market is producing the best quality of goods. Consumers always want the best quality of goods; some even don’t care about the price. Dominating firms will win consumers and take over everything that small firms have.
In conclusion, to prevent all of this from happening, the government power is very useful in this situation. The government can intervene to stop a firm from doing monopoly by improving the public firms. The public firms can dominate the dominating firm and stop the competition. Competition is sometimes a disadvantage for the government, consumers and other firms in the same industry. Dominance in the market is not good and not healthy.
Monopoly is when a group or person is the only supplier of the commodity for particular product like in Indonesia the Electricity is controlled and owned by one company that's called PLN. Monopolies Restrictive Trade Practices is a condition when a firm is make an effort to remove their competitor in the market and they can control the market with high prices and the market can't do anything because if they don't pay they can't satisfy their needs and wants. It sounds bad but actually monopoly has some benefits too.
ReplyDeleteMonopoly is happening because they just the only one who can provide any particular product that needed in human life, they will do anything to keep their company sole then they can keep the monopoly going well without government intervention. Also since monopoly usually is the large firm who has large scale of production they will be benefited from economies of scale that can reduce their costs and if their costs are low, so the prices of goods that they sell will low indeed.
Monopoly also can benefited consumer by the firm that will keep their good quality of product and keep their prices in the standard that people affordable to pay. They must be scared if they set their goods with high prices, and then when a new firm come with lower prices but has a good or better quality they afraid they will lose their market share.
As the monopoly usually done by large firm then the new entrants come, certainly this large firm will do some barriers to make this newly firm kicked out of the business and keep their firm as the only one in that country so the monopoly still in their side. This also can benefited the firm because maybe people will think that new entrants in the market has lower prices but bad quality, so they are not losing their market share but increase it.
Government don't need to be so active in monopoly area, because when government intervention is there maybe government will make new policies that bad for the firm and it will also affected to consumer, like if government set new rate for premises taxes and also the rate for buying machinery, as soon as possible this firm will increase their prices which is not good for consumer that will pay more because automatically firms will also increase their goods prices.
The other benefit for consumer is when this monopoly large firm that want to increase their goods quality but with slightly change in prices, they must do some invention and buying some new technologies, this is not cheap and need a lot of money because they're monopoly firm they will get high revenues and profits but also resources that able to make this happen, they also need consumers' opinion because they produce it for consumer and they will make their satisfaction still the same or maybe higher than before with a better quality of product and with steady prices or a little change in price but still affordable for people.
So, Government don't need too active in making policies for monopoly because it still benefited consumers and others that involved, as long as the monopoly is in the proper way.
Government is a very strong organization that create law in the country and rule in the country , their job is to control all the activities in the country either is good or bad condition. And if this related to the article , the government duty is to control the monopoly in the country. But are all monopolies are bad ? Before i start you must to know what is monopoly ? Monoply is a condition when one firms control all the market , so that the firms take most of possibilities customer. Monopoly usually did by the large firms , they doing this to be the market leader in the country so small / new firms can’t compete against them.
ReplyDeleteMonopolies are not always bad because customers also have a will to choose what firms that they want to choose to but their product. The point is usually goods that sell by the company that do monopoly is high , because they think the people will have a very less choice. But they don’t think forward. If they set their prices in high prices , people that have low income can’t buy the product because the price is high. So only people that have medium or high income can but the product. So people that have a low income will buy the product in the other firms. Eventhough maybe the taste and quality is not good as the monopoly company products. For example there’s a monopolistic company that sell a milk product that already have a good brand image but they set their prices for one box of milk for $10 , but suddenly a new competitors come and also sell milk but with the lower price , we can say they sell one box of milk for $4. Eventhough the new competitors still doesn’t have a good image brand and maybe the quality is not as good as the monopolistic company. People that have low until medium income will be attract to the new competitors milk product because the difference of the prices is very far. The new competitors set the prices 60% cheaper than the monopolistic company milk products.
Government also will be benefited by the existing monopoly company , because monopolistic company usually is a big firms. It means that they have large scale of production , so the government will got revenue from the taxes that given by the company. Can you imagine ? if the firms sell 1 million products to the market and the government set the taxes in every goods that they sold. Government will get a lot of benefit from that. For example they sell milk for $10 each and government set 10% taxes for each milk and they sent 1 million milk to the market. For each milk that sold the government got $1 by taxes. So if there are 1 million milk that already sold to the customer. Government will got 1 million dollar by taxes.
So monopoly are not always give a bad effect , there’s also a good effect because monopoly can benefit some of small competitors , government , and the company itself.
The conclution is the government doesn’t need to active in a role implanting the monopolies restrictive trade practices art. Because the government already benefited it self by taxes.
Richard DS / 10 BN
Government is A group of people that governs a community or unit. It sets and administers public policy rules, regulation, political and sovereign power through customs, institutions, and laws within a state.
ReplyDeleteMonopolies meant the condition when a specific market or enterprise is the only singgle seller in the market, the translation is there is no competition, but there are many buyers in the market, it happened usually because the goods/services doesn't have close subtitute.
Generally, the existence of monopoly can be benefited to consumers, government, also the company itself.
First, monopoly enjoys economics of scale as it is the only supplier of product or service in the market.Economics of scale meant, when there are large quantity of production, the average cost for production become cheaper compared to the small scale of production, from this statement we can say the monopoly market can be benefited because their expenditure for production is less, so it will affact and the benefits can be passed on to the consumers because the market will sell the goods or services in lower prices, so it will increase the market share also will boost demand and revenues for the company.
second, we can see from the government side. When the company getting bigger, they will pay more taxes to the government, so it will increase government revenue from taxation, and so it will influenced the other sides too, like poor people, so government can give more subsidy to them. Also to the society, government can provide better and decent public goods.
But, besides this superiority, the existence of monopolies market can threat the other people (suppliers,consumers,etc).
the first possibility is, the monopolies can make barriers for the other market, even its natural barriers or the other kind of barriers. example, there is a supermarket in one area, very big and large supermarket that provide everything for our day-to-day demand, and suddenly the competitor for the supermarket appear and want to do competition with the first large supermarket. But before the new competitor enter the competition, they have already meet the barriers, such as, they don't know where to get the supply of goods or services, because the large supermarket will threat the suppliers if the suppliers give the product to the new competitor. Definitely the suppliers on the first supermarket side, because if the suppliers lose their big client, it will affect the supplier because when the large supermarket buy the product, they buy in a very big scale compared to the new competitor, it means that it is hard for the new competitor to enter the market to create job field, it also can increasing the unemployment numbers especially in less developing country.
Second, for the consumers. Because they do monopoly in some particular area, consumers will force to buy the goods/services in the monopoly market, because it is the only market who sold the goods and services (because there is no close substitution). It will affect the company, because the company feel powerful, they can set their prices high because there is price inelasticity ( the responsiveness of consumers when there is modest demand in changes price ), also they can reduce the quality of the goods and services(because lack of competition), so it can cause dissatisfied consumers.
monopoly firms are also sometimes known for practicing price discrimination where they charge different prices on the same product for different consumers.
For the company itself too, they can exploit the natural resources also the labour , example because they feel powerful and influenced in many aspects, they won't give insurance or the others agreeement for the workers, even its written already before, so it will affect the workers itself because they dont have any guarantee to hold.
so the conclusion is government should play more active role in implementing the policies maintained by Monopolies Restrictive Trade Practices to avoid the negative effect that we've already discussed above.
Monopoly is an enterprise that is the only seller of good an service. Monopoly can also slow the growth of the market because of monopoly market power and make take some obstacles for competitors. This some disadvantages of monopoly.
ReplyDeletefirst, exploitation of consumers a monopoly market is best known for consumer exploitation, there are indeed no competing product and as a result the consumers gets a raw deal in term of quantity, quality and pricing. The firm may find it easy to produce interior or substandard goods if wishes because the end of the day they know very well that the items will be purchased as there are no competing products for the already available market.
second, dissatisfied consumers- consumers get a raw deal from a monopoly market because quality will be compromised. Therefore it is not a wonder to see very dissatisfied consumers who often complain about the firm's products.
third, higher prices-no competition in the market means absence of such things as price wras that may have benefited the consumer and as a result of this monopoly firms tend to charge higher prices on goods and services hence inconveniencing the buyer.
forth, Price discrimination- monopoly firms are also sometimes known for practicing price discrimination where they charge different prices on the same product for different consumer.
fifth, Inferior goods and services- competition is minimal or totaly absent and such the monopoly firm may willingly produce inferior good and services because after all they know the goods will not fail to sell.
sixth, Productive inefficiency- Monopoly is productively inefficient because output does no occur at the lowest point on the AC curve.
seventh, Charge higher prices to suppliers- monopolies may usetheir supernormal profits to charge higher prices to suppliers.
So, i aggre if the goverment make regulation to limited the monopoly, because monopoly can a void the growth of the market. Because monopoly take control the market and become barriers for the new competitors, can make dissavantages for customer because they over higher prices to customer and customer don't have any choices so goverment should make regulation to limited the monopoly.
Monopoly is where there is only a single company, usually a large cooperation that nearly or even owns all of the market for given type of product or service. The aims of monopolies restrictive trade practices act are to prevent adverse general economic strength, to restrictive unfair trade and protect consumer demanded. While the government is the one who set regulations in a country.
ReplyDeleteMonopoly could bring some advantages to many sectors, to customers, to producers itself and also to the economic in the country. Monopoly generally producing goods or services on a very large scale, they may be better placed to take the advantage of economies of scale because in a leading of falling in the average total o f cost of production. This reduction in costs will lead to an increase in monopoly profits, benefitted to the producers, and also to the consumers because they provide in large quantity of output in which will definitely be benefitted by being able to pay in the form of lower price.
Also, monopoly may help the company to import of their products and compete with foreign companies, this will boost the import and export trading for the country.
However, there are also many disadvantages of monopolies, first, monopoly causes a reduction satisfaction to customers because there is only one producer or provider of goods and services available, so the customers face lack of choice and they are coerced to buy their goods and services when they need it.
Second, monopoly can cause the increases of prices as there is only one company that provide such the product or services, the company can set the price high in order to get higher profits. Indeed, because of the company want to increase their profit by increasing the prices.
Like for example, there is one ice cream, Magnum company that depends on Morin company that receives its primary material, that is the Morin’s chocolate. If the Morin company raises the price of their chocolate, surely the Magnum company also will increase its prices. In addition, the company may to self-sacrifice to be that only company which providing the primary materials.
Third, monopolies are also bad for an economy in a country because other manufacturer has no incentive to innovate and provide new and improving products to customers.
Fourth, may face lack of competition that will lead to low quality of the product and out dated goods and services. Lack of competition will cause the small company forced to out of their business activities or even create a barriers to the new business, since the producer who hold monopoly too long this will result in wealth and a strong brand name that gives the company itself as an excellent reputation or brand image. So other company better resign from business than lose compete, that may lead to bankruptcy.
And last, fifth, monopoly could create inflation. Since, they are the price fixing. They can set the prices whatever they want because monopolies are the only provider, regardless of demand, because they know the customers has no other choice.
So, as the conclusion, to prevent the situations that come up, the decreasing of gratification of consumers, the increasing of prices, decreasing of low quality of the product, lack of competition, emergence of price inflation and others.
Government should better start to fight monopoly by changing their policies and rules, such as control annual price increases and introducing the fresh competition or new competition and small competition into particular industries.