Market structure Essay
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The numbers of firms that produce identical products or goods which are homogenous are called market structure. Industrial regulation is the government regulation on an entire industry with the objective of keeping a close eye on the industry prices and take advantage of consumers. Rules set by government and agencies that help control the operations of businesses who may demonstrate monopoly power in their organization. Monopoly may lead to consumers being exploited (higher prices) and consumers paying way too much for a product.
Antitrust laws are federal and state government laws that regulate the conduct and organization or businesses. This helps promote fair competition for consumers. There are four main areas involving the antitrust laws that include agreements between competitors, contractual agreements between sellers and buyers, the restriction and maintenance of monopoly, and mergers. The Sherman Act, which is one of the main statutes, has a contract or agreement in the form of a trust, dealing with trade and commerce among numerous of states, or nations, is deemed illegal.
Also, it states that any person who monopolize, or attempt to, conspire with any other person(s) to monopolize in trade commerce will be found guilty and charged with a felony. Both of these violations carry major penalties. For each corporation that violates the act may be fined up to $1 million. Likewise, any persons found guilty of a violation may be fined up to $100, 000 and/or imprisonment for up to three years. For corporations, it is hard to enforce this law due to lack of identification of a specific market to prove monopolization.
It requires scrutiny of both the market and the product from the vantage point of both the consumer and other potential producers (Ecnomicae). The Clayton Antitrust Act added to the already existing antitrust law by forbidding things like price discrimination, “where the effect of numerous practices may be to drastically decrease competition or to create a monopoly. This act states that it is unlawful for a person involved in commerce to discriminate in price between different buyers or consumers of products of similar quality and grade.
This act does not include situations where a person can show that price discrimination does not reduce competition, such as discounts for students and senior citizens. On the other hand, things such as medical expenses being higher for one person and cheaper for someone else with the same treatment or gas prices that go way up than that of their competitors, which causes a noticeable difference in prices, accounts for price discrimination. The Federal Trade Commission Act reinforces the Clayton Act and created a commission (FTC). This act investigates and challenges any unfair methods of competition, deceptive acts affecting commerce (UNC).
However, it does not define “unfair practices”, but is left up to the courts for review to determine what practices are unfair and deceptive. This act has been successful in decreasing business fraud and misleading advertisement and other false procedures. The fourth act, which is the Robinson-Patman Act, limited price discrimination in the form of special promotional allowances. Businesses could discount only as “good faith” to meet the competition or differences in cost. Many consumers believe this act protects small firms from competition, rather than a guarantee of competition.
There is a huge difference between protecting competitors from failure and promotion competition. The industry regulation effect several entities, two of which are monopolies and oligopolies. Suppliers and distributors have the power to determine the price of the product and can set any price. This brings about the industry regulation. It prevents the monopolies and oligopolies from charging ridiculous and unfair prices for products. The FTC is the major regulatory body of monopolies today. A monopoly occurs when a certain business or distributor is the only supplier of a certain product.
Businesses that cause a firm to supply more than 25% of the market price are called a working monopoly (Tutor2U). Many utilities are monopolies by having the entire market share in certain areas. With deregulation of these utilities, the market becomes open to competition for market share to begin. In terms of regulation of monopoly, the government attempts to prevent operations that are against the public interest, call anti-competitive practices. Likewise, oligopoly is a market condition where there are minimal distributors that have a major influence on prices and other market factors.
This causes market failure, especially if evidence of collusive behavior by dominant businesses is found. There are three primary federal and state regulatory commissions that govern industrial regulation. They include the Federal Power Commission, the Federal Energy Regulation Commission, and the Natural Gas Act. The Federal Power Commission, which was created in 1930, allowed cabinet members to coordinate federal hydropower dams and navigable waters that the federal government owned. Years later, the FPC became The Federal Energy Regulation Commission.
The FERC oversee the transmission of liquefied natural gas, while still overseeing electricity and hydroelectric projects. The Federal Energy Regulation Commission possess control over electricity, natural gas pricing, and oil pipeline and non-federal hydropower projects. It is made up of five commissioners that are approved by the President with approval from the Senate. In 1938, the Natural Gas Act was passed that allowed the FPC jurisdiction over interstate natural gas lines. Intended purposes of social regulation as it appears to all market structure.
It prohibits businesses from producing products in ways that are deemed harmful and hazardous to the public in terms of health, safety, and the environment (Longley). One example would be the Department of Energy policy, which prohibits businesses from selling fuel, oil, and products associated with oil to discontinue their sale due to health and fire hazards. The Food and Drug Administration requires businesses to provide labels with specific information on the packages. Also, the FDA holds businesses accountable for producing products in ways that are beneficial to the public.
There are five primary federal regulatory commissions that provide social regulations are EEOC, EPA, OSHA, FDA, and CPSE. Occupational Safety and Health Administration (OSHA), requires a safe and healthy work environment by enforcing certain standards, providing training, and assistance to those who need it. The Equal Employment Opportunity Commission (EEOC), make it illegal to discriminate against anyone, including any person applying for a job and employees, due to their race, color, religion, sex, nationality, age, disability, or genetic information.
Likewise, no person shall discriminate against anyone who files a complaint or is involved in an investigation within the organization. The Food and Drug Administration protects the public’s health through regulation and supervision of food safety, tobacco products, dietary supplements, prescription, and over-the-counter drugs, vaccines, medical equipment, veterinary products, and radiation emitting equipment, blood transfusion, and biopharmaceuticals. The Environmental Protection Agency (EPA) protects human’s well-being and the environment by enforcing regulations passed by Congress.
It maintains nationals standards under several environmental laws associated with local, tribal, and state government. The EPA specializes in permitting, monitoring, and enforcement. They are issue fines, sanctions, and other penalties. Lastly, the Consumer Product Safety Commission bans dangerous consumer products, issue recalls on goods that are already on the market, and research potential hazards associated with consumer’s goods. The CPSC has a consumer ready hotline and website to allow people access to report problems and concerns about unsafe and hazardous products or anything dealing with such products.