Cartel
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This document discusses cartels, including what they are, different types, how they can succeed or fail, and their impact. A cartel is a formal agreement between producers to regulate supply and prices in order to maximize profits. They aim to increase profits by fixing prices, limiting supply, or other means. While cartels can benefit members by avoiding price competition, they often fail due to cheating or lack of cooperation between firms and create inefficiencies in the market. The only legal cartel is OPEC, which restricts oil production through quotas.
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The document outlines tools of fiscal policy used by governments including taxes, government expenditure, public debt, and deficit financing. Taxes are the main way governments collect money from the public through income, sales, and indirect taxes. Government expenditure is also important for economic growth by funding projects that create jobs and stimulate the economy. Public debt, through borrowing from both banks and non-banks, can promote economic stability and full employment. Deficit financing refers to when a government borrows to meet budget deficits, which can increase aggregate demand through higher incomes.
Cartels ppt
This document discusses cartels, which are formal agreements among competing firms or countries to fix prices, marketing, and production to raise profits. It defines cartels and describes different types. Conditions for cartel success include the ability to detect and prevent cheating between members. However, cartels often fail due to a lack of trust between firms and cheating by overproducing or lowering prices. Examples of cartels discussed include OPEC and historical oil companies. American antitrust law prohibits cartel practices that reduce competition or create monopolies. The document concludes that cartel agreements are unstable and incentives remain to re-form broken cartels.
Market Failure
This document discusses various types of market failures including externalities, public goods, and imperfect information. It provides examples of negative and positive externalities and how they can lead to inefficient market outcomes. Methods for dealing with externalities include direct regulation, tax incentives, and market incentives. Public goods are nonexclusive and nonrival, but their value is difficult to determine via markets due to free rider problems. Imperfect information between buyers and sellers can also cause market failures. While government intervention may aim to correct market failures, governments can also fail due to issues like lack of proper incentives, information, and flexibility.
Global investing
Global investing involves selecting international investment instruments to diversify a portfolio across foreign markets and companies. There are benefits like attractive opportunities and diversification, but also risks such as political risk, currency risk, and market volatility. To measure return on foreign investments, the realized rupee return depends on the foreign currency return and exchange rate change between the currency and rupee. Variance is used to measure investment risk and incorporates variance of foreign returns, exchange rates, and their covariance. Common ways for individuals to invest abroad include foreign stocks, funds, and ETFs listed on Indian exchanges.
Non - tariff barriers
Non-Tariff barriers are trade barriers that restrict imports but are not in the usual form of a tariff.
Some common examples are anti-dumping measures and countervailing duties also called non-tariff barriers.
Non-Tariff barriers include macro-economic measures affecting trade.
Non-Tariff barriers comes under Trade Policy.
Privatisation and disinvestment
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Free trade vs protection
This document discusses the arguments for and against free trade versus protectionism. It begins by providing context from classical economists who argued for free trade, and the rise of protectionism post-World War II. It then outlines the key arguments for free trade, including specialization, increased prosperity, and competitive pressures. Arguments against free trade include the potential harm to developing economies and domestic industries. The document also discusses the economic and non-economic arguments in favor of protectionism, such as for infant industries, employment, and national defense. Finally, it notes some arguments against protectionism like increased prices and reduced innovation.
Cartels
Cartels are formal organizations between manufacturers that agree to fix prices and production levels. They can be public or private. Cartels aim to control markets through price fixing and allocating territories, but often fail because the incentive for individual firms to cheat grows over time by lowering prices or overproducing. Notable examples include the aviation cartel between Indian airlines and the lysine cartel in the 1990s involving Archer Daniels Midland that was fined heavily for price fixing. In conclusion, while cartels seek to regulate competition, they are inherently unstable arrangements.
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Cartels ppt
This document discusses cartels, which are formal agreements among competing firms or countries to fix prices, marketing, and production to raise profits. It defines cartels and describes different types. Conditions for cartel success include the ability to detect and prevent cheating between members. However, cartels often fail due to a lack of trust between firms and cheating by overproducing or lowering prices. Examples of cartels discussed include OPEC and historical oil companies. American antitrust law prohibits cartel practices that reduce competition or create monopolies. The document concludes that cartel agreements are unstable and incentives remain to re-form broken cartels.
Market Failure
This document discusses various types of market failures including externalities, public goods, and imperfect information. It provides examples of negative and positive externalities and how they can lead to inefficient market outcomes. Methods for dealing with externalities include direct regulation, tax incentives, and market incentives. Public goods are nonexclusive and nonrival, but their value is difficult to determine via markets due to free rider problems. Imperfect information between buyers and sellers can also cause market failures. While government intervention may aim to correct market failures, governments can also fail due to issues like lack of proper incentives, information, and flexibility.
Global investing
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Non - tariff barriers
Non-Tariff barriers are trade barriers that restrict imports but are not in the usual form of a tariff.
Some common examples are anti-dumping measures and countervailing duties also called non-tariff barriers.
Non-Tariff barriers include macro-economic measures affecting trade.
Non-Tariff barriers comes under Trade Policy.
Privatisation and disinvestment
The document discusses privatization and disinvestment in India. Privatization involves transferring ownership of public sector industries to private companies. The government aims to increase efficiency and competitiveness through privatization. Disinvestment is the process of the government selling assets or shares in public sector undertakings (PSUs) to reduce deficits and improve finances. It began in 1991 and a commission was formed to oversee disinvestment. Privatization transfers over 50% ownership and management control, while disinvestment can range from reducing government stake to below 50% control to full privatization.
Free trade vs protection
This document discusses the arguments for and against free trade versus protectionism. It begins by providing context from classical economists who argued for free trade, and the rise of protectionism post-World War II. It then outlines the key arguments for free trade, including specialization, increased prosperity, and competitive pressures. Arguments against free trade include the potential harm to developing economies and domestic industries. The document also discusses the economic and non-economic arguments in favor of protectionism, such as for infant industries, employment, and national defense. Finally, it notes some arguments against protectionism like increased prices and reduced innovation.
Cartels
Cartels are formal organizations between manufacturers that agree to fix prices and production levels. They can be public or private. Cartels aim to control markets through price fixing and allocating territories, but often fail because the incentive for individual firms to cheat grows over time by lowering prices or overproducing. Notable examples include the aviation cartel between Indian airlines and the lysine cartel in the 1990s involving Archer Daniels Midland that was fined heavily for price fixing. In conclusion, while cartels seek to regulate competition, they are inherently unstable arrangements.
Classical Theory Of International Trade
The document discusses theories of international trade, including:
1) David Ricardo's theory of comparative advantage, which states that countries should specialize in goods they have a comparative cost advantage in.
2) Absolute and comparative differences in costs as bases for international trade according to Adam Smith and Ricardo respectively.
3) Equal differences in costs not providing a basis for trade between countries with equal production ratios.
monopoly and monopolistic market
This document provides an overview of monopoly and monopolistic markets. It defines a monopoly market as having a single seller of a unique product, where barriers to entry prevent competition. Features include abnormal profits and price inelastic demand. A monopolist determines price by producing where marginal revenue equals marginal cost to maximize profits. A monopolistic market has many sellers of differentiated but substitutable products, with free entry and exit. Firms compete but influence each other. They set price along their demand curve above average cost to earn supernormal profits in the short run but normal profits in the long run equilibrium. The key difference between monopoly and monopolistic markets is the number of sellers and availability of substitutes.
Inflation, types of inflation
This document discusses various types and causes of inflation. It outlines six main causes of inflation: demand-pull, cost-push, profit-induced, budgetary, monetary, and multi-causal inflation. It also discusses inflation based on rates (anticipated vs unanticipated), degrees (creeping, walking, running, hyper), and levels of control (open vs suppressed; partial vs full). Deflation is also briefly covered, defined as a decrease in general price levels that can exacerbate recessions.
Commercial policy
Commercial policy refers to the regulations and policies that determine how a country conducts international trade. It includes tariffs and other trade barriers that restrict what goods can be imported or exported and which countries goods can be traded with. Countries in economic unions often have a single commercial policy governing trade with non-member countries. The objectives of commercial policy are to regulate trade flows while protecting domestic markets and industries and managing foreign exchange. Both advantages like protecting infant industries and disadvantages like increased costs to consumers can result from a country's commercial policy.
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Cost Comparative Theory
The document summarizes David Ricardo's theory of comparative advantage. It explains that according to Ricardo, countries can benefit from trade even if they do not have an absolute advantage in producing goods, as long as they have a comparative advantage in at least one good. This is illustrated using data showing that while England has higher absolute costs of production than Portugal for both wine and cloth, it has a lower relative production cost for cloth, giving it a comparative advantage. International trade allows both countries to specialize in the goods they have a comparative advantage in, increasing total world output.
BALANCE OF PAYMENT
This document provides an overview of balance of payments (BOP) accounting. It defines BOP as a systematic record of all economic transactions between a country and the rest of the world. It notes that BOP has three main components: the current account balance, capital account balance, and the overall BOP. The current account tracks goods/services exports and imports, while the capital account tracks financial flows. The document also discusses factors that can cause BOP disequilibriums and monetary/non-monetary policy tools to correct imbalances, such as devaluation, export promotion, and tariffs.
Objectives of Fiscal Policy
objectives of fiscal policy
,
to accelerate the rate of economic growth:
,
optimum allocation of resources
,
generally following are the objectives of a fiscal
,
equitable distribution of income and wealth:
,
full employment
,
to encourage investment
,
economic stability:
Business cycle
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Recent trends in foreign trade in india
This document provides an overview of recent trends in India's foreign trade since 2000. It discusses India's foreign trade policy, the importance of foreign trade, documents used in foreign trade transactions, key features of India's foreign trade, benefits and limitations of foreign trade, and India's export and import performance by key commodities and countries. The conclusion is that India's foreign trade has undergone positive changes since implementing its foreign trade policy in 2000, with exports and imports among foreign countries increasing and becoming more secure, helped by the establishment of special economic zones.
International economic ch01
This document provides an introduction to international economics. It discusses that international economics deals with economic interactions between independent nations, and analyzes issues like the gains from trade, patterns of trade, trade policies, balance of payments, exchange rates, and international policy coordination. It notes that international trade focuses on real transactions of goods while international monetary analysis examines financial transactions and exchange rates. The overall topic will cover international trade theory and policy as well as exchange rates and international macroeconomic policy.
The role of government in a market economy
The document summarizes key characteristics of a market economy, including private property rights, free enterprise with low barriers to entry, self-interest as the main motivator, competition among buyers and sellers, and supply and demand determining prices. It also discusses the appropriate role of government in a market economy, such as providing legal protections, public goods, addressing market failures, maintaining competition, redistributing income, and stabilizing the economy.
Mixed Economy
Mixed economies have characteristics of both market and planned economies. The means of production are mainly privately owned and markets are dominant, but the government wields influence through fiscal and monetary policies to counter economic issues. Both private and public sectors exist side by side, with the private sector handling industries like agriculture and consumer goods while the government controls strategic sectors like banking, transport, and energy. A mixed economy aims to take advantage of private companies' capitalist nature and the government's socialist goals of balanced growth and less income inequality. However, resources may not be used optimally as the government prioritizes overall societal benefits, and private enterprises face difficulties from government bureaucracy.
Macro economics ppt
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Market structure
The document discusses different types of market structures: perfect competition, monopoly, monopolistic competition, and oligopoly. It provides features and examples of each. Perfect competition is characterized by many small firms and buyers/sellers, homogeneous goods, free entry and exit. Examples include street food and fish markets. A monopoly has a single seller, barriers to entry, and products without close substitutes. Examples given are Indian Railways and aircraft production. Monopolistic competition has many buyers/sellers, product differentiation, and free entry/exit. Soap brands are used as an example. Oligopoly is dominated by a small number of large firms in an industry with high barriers to entry and interdependence between companies. Industries like cars
Theories of international trade
Mercantilism encouraged exports and discouraged imports to accumulate wealth, usually in gold and silver. Adam Smith argued that free trade and specializing in absolute advantages benefits countries more. Comparative advantage theory extended this by showing even without absolute advantages, all countries gain from trade. Porter's diamond model explains how national competitive advantages arise from factor conditions, demand conditions, related/supporting industries, and firm strategy/rivalry within a country.
Free Trade Vs Protectionism
The document discusses protectionism and trade liberalization. Protectionism refers to restricting trade between countries through tariffs, quotas, and non-tariff barriers. Tariffs increase import prices while quotas restrict quantities. Non-tariff barriers make trade costly through regulations and standards. Countries adopt protectionism to shield domestic industries and jobs and for strategic or political reasons. Trade liberalization aims to reduce these barriers by promoting specialization, efficient resource allocation, and market access through agreements like GATT and the WTO. However, fully liberalizing world trade faces challenges in removing barriers like agricultural subsidies.
Keynesian theory of income determination
This document provides an overview of Keynesian theory of income determination. It discusses some key concepts:
1) According to Keynes, the equilibrium level of national income and employment is determined by the interaction of aggregate demand (C+I) and aggregate supply (C+S). This equilibrium is called the effective demand point.
2) Effective demand represents the total spending in the economy that matches aggregate supply. It is the level of income and employment where there is no tendency to increase or decrease production.
3) The effective demand point may be below full employment, indicating underemployment. Government spending can increase aggregate demand and move the economy to a new equilibrium with higher income and full employment.
Oligopolistic markets mba assignment-2016
1. The document discusses various theories of oligopoly market structure, including game theory, the kinked demand curve theory, the Bertrand model, cartel theory, and Cournot's model.
2. Game theory and the kinked demand curve theory explain why firms in an oligopoly may choose to advertise or keep prices rigid. The Bertrand model analyzes price competition between firms producing homogeneous goods.
3. Cartel theory discusses how firms may coordinate production and prices to behave like a monopolist. However, cartels are unstable due to incentives for members to cheat.
4. Cournot's model analyzes duopoly competition through strategic output decisions. It remains a standard tool but
Opec is an example of
OPEC is an example of a cartel. A cartel is a formal agreement among competing firms in an oligopolistic industry to fix prices, marketing, and production to increase profits by reducing competition. OPEC is the most well-known international cartel, with its members regularly meeting to decide each country's allowed oil production levels. As the largest oil producing and exporting cartel, OPEC functions to enforce production quotas among its members and influence global oil prices through coordinating supply.
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Classical Theory Of International Trade
The document discusses theories of international trade, including:
1) David Ricardo's theory of comparative advantage, which states that countries should specialize in goods they have a comparative cost advantage in.
2) Absolute and comparative differences in costs as bases for international trade according to Adam Smith and Ricardo respectively.
3) Equal differences in costs not providing a basis for trade between countries with equal production ratios.
monopoly and monopolistic market
This document provides an overview of monopoly and monopolistic markets. It defines a monopoly market as having a single seller of a unique product, where barriers to entry prevent competition. Features include abnormal profits and price inelastic demand. A monopolist determines price by producing where marginal revenue equals marginal cost to maximize profits. A monopolistic market has many sellers of differentiated but substitutable products, with free entry and exit. Firms compete but influence each other. They set price along their demand curve above average cost to earn supernormal profits in the short run but normal profits in the long run equilibrium. The key difference between monopoly and monopolistic markets is the number of sellers and availability of substitutes.
Inflation, types of inflation
This document discusses various types and causes of inflation. It outlines six main causes of inflation: demand-pull, cost-push, profit-induced, budgetary, monetary, and multi-causal inflation. It also discusses inflation based on rates (anticipated vs unanticipated), degrees (creeping, walking, running, hyper), and levels of control (open vs suppressed; partial vs full). Deflation is also briefly covered, defined as a decrease in general price levels that can exacerbate recessions.
Commercial policy
Commercial policy refers to the regulations and policies that determine how a country conducts international trade. It includes tariffs and other trade barriers that restrict what goods can be imported or exported and which countries goods can be traded with. Countries in economic unions often have a single commercial policy governing trade with non-member countries. The objectives of commercial policy are to regulate trade flows while protecting domestic markets and industries and managing foreign exchange. Both advantages like protecting infant industries and disadvantages like increased costs to consumers can result from a country's commercial policy.
Doha round 2001
The Doha Round was launched in 2001 in Doha, Qatar to further lower trade barriers beyond the Uruguay Round. Its key objectives were reducing barriers to agricultural and manufacturing trade as well as expanding trade in services and intellectual property regulations. However, negotiations faced many challenges around agriculture subsidies and access for developing countries, intellectual property and public health issues, and special treatment for developing nations. The round ultimately did not reach a consensus and collapsed in 2015 without a final agreement.
The Gains from International Trade
This document discusses the gains from international trade. It defines gains from trade as the advantages that countries enjoy through specialization and division of labor when participating in international trade. There are static and dynamic gains. Static gains come from short-term reallocation to comparative advantage sectors, while dynamic gains accumulate over time through factors like increased productivity and investment. Countries can measure gains from trade through approaches looking at reduced production costs, improved terms of trade, and increases in real income. Smaller countries tend to benefit more from trade than larger countries due to greater opportunities for specialization.
Balance of trade & balance of payment
Balance of trade and balance of payments are key economic indicators of international trade. Balance of trade refers specifically to physical goods, comparing the value of a country's exports to its imports. It is favorable if exports exceed imports. Balance of payments includes both physical goods and invisible items like services, income, and capital transfers. It always balances to zero and includes the current account for trade in goods/services and the capital account. Unfavorable balances can be caused by economic, political, and social factors but can be improved through export promotion, reducing imports, and exploring new markets.
Cost Comparative Theory
The document summarizes David Ricardo's theory of comparative advantage. It explains that according to Ricardo, countries can benefit from trade even if they do not have an absolute advantage in producing goods, as long as they have a comparative advantage in at least one good. This is illustrated using data showing that while England has higher absolute costs of production than Portugal for both wine and cloth, it has a lower relative production cost for cloth, giving it a comparative advantage. International trade allows both countries to specialize in the goods they have a comparative advantage in, increasing total world output.
BALANCE OF PAYMENT
This document provides an overview of balance of payments (BOP) accounting. It defines BOP as a systematic record of all economic transactions between a country and the rest of the world. It notes that BOP has three main components: the current account balance, capital account balance, and the overall BOP. The current account tracks goods/services exports and imports, while the capital account tracks financial flows. The document also discusses factors that can cause BOP disequilibriums and monetary/non-monetary policy tools to correct imbalances, such as devaluation, export promotion, and tariffs.
Objectives of Fiscal Policy
objectives of fiscal policy
,
to accelerate the rate of economic growth:
,
optimum allocation of resources
,
generally following are the objectives of a fiscal
,
equitable distribution of income and wealth:
,
full employment
,
to encourage investment
,
economic stability:
Business cycle
The document provides an overview of the business cycle including its phases, causes, and conclusion. It discusses the business cycle in terms of fluctuations in economic activity and gross domestic product. The phases include expansion/growth, peak, recession, and trough/depression. Causes include factors like consumption, business investment, government activity, inventions, and wars. In conclusion, the business cycle refers to regular fluctuations in economic indicators that occur in a predictable pattern in capitalist societies.
Recent trends in foreign trade in india
This document provides an overview of recent trends in India's foreign trade since 2000. It discusses India's foreign trade policy, the importance of foreign trade, documents used in foreign trade transactions, key features of India's foreign trade, benefits and limitations of foreign trade, and India's export and import performance by key commodities and countries. The conclusion is that India's foreign trade has undergone positive changes since implementing its foreign trade policy in 2000, with exports and imports among foreign countries increasing and becoming more secure, helped by the establishment of special economic zones.
International economic ch01
This document provides an introduction to international economics. It discusses that international economics deals with economic interactions between independent nations, and analyzes issues like the gains from trade, patterns of trade, trade policies, balance of payments, exchange rates, and international policy coordination. It notes that international trade focuses on real transactions of goods while international monetary analysis examines financial transactions and exchange rates. The overall topic will cover international trade theory and policy as well as exchange rates and international macroeconomic policy.
The role of government in a market economy
The document summarizes key characteristics of a market economy, including private property rights, free enterprise with low barriers to entry, self-interest as the main motivator, competition among buyers and sellers, and supply and demand determining prices. It also discusses the appropriate role of government in a market economy, such as providing legal protections, public goods, addressing market failures, maintaining competition, redistributing income, and stabilizing the economy.
Mixed Economy
Mixed economies have characteristics of both market and planned economies. The means of production are mainly privately owned and markets are dominant, but the government wields influence through fiscal and monetary policies to counter economic issues. Both private and public sectors exist side by side, with the private sector handling industries like agriculture and consumer goods while the government controls strategic sectors like banking, transport, and energy. A mixed economy aims to take advantage of private companies' capitalist nature and the government's socialist goals of balanced growth and less income inequality. However, resources may not be used optimally as the government prioritizes overall societal benefits, and private enterprises face difficulties from government bureaucracy.
Macro economics ppt
Macroeconomics analyzes aggregate economic variables such as total output, investment, exports and the average price level rather than individual markets. It considers how these aggregates result from the activities and decisions of consumers, government and firms. The document defines key macroeconomic concepts including gross domestic product, inflation, unemployment, economic models, and the business cycle. It explains that unemployment and inflation tend to vary over the course of the business cycle, with unemployment a greater problem during contractions and inflation a greater problem during expansions.
Market structure
The document discusses different types of market structures: perfect competition, monopoly, monopolistic competition, and oligopoly. It provides features and examples of each. Perfect competition is characterized by many small firms and buyers/sellers, homogeneous goods, free entry and exit. Examples include street food and fish markets. A monopoly has a single seller, barriers to entry, and products without close substitutes. Examples given are Indian Railways and aircraft production. Monopolistic competition has many buyers/sellers, product differentiation, and free entry/exit. Soap brands are used as an example. Oligopoly is dominated by a small number of large firms in an industry with high barriers to entry and interdependence between companies. Industries like cars
Theories of international trade
Mercantilism encouraged exports and discouraged imports to accumulate wealth, usually in gold and silver. Adam Smith argued that free trade and specializing in absolute advantages benefits countries more. Comparative advantage theory extended this by showing even without absolute advantages, all countries gain from trade. Porter's diamond model explains how national competitive advantages arise from factor conditions, demand conditions, related/supporting industries, and firm strategy/rivalry within a country.
Free Trade Vs Protectionism
The document discusses protectionism and trade liberalization. Protectionism refers to restricting trade between countries through tariffs, quotas, and non-tariff barriers. Tariffs increase import prices while quotas restrict quantities. Non-tariff barriers make trade costly through regulations and standards. Countries adopt protectionism to shield domestic industries and jobs and for strategic or political reasons. Trade liberalization aims to reduce these barriers by promoting specialization, efficient resource allocation, and market access through agreements like GATT and the WTO. However, fully liberalizing world trade faces challenges in removing barriers like agricultural subsidies.
Keynesian theory of income determination
This document provides an overview of Keynesian theory of income determination. It discusses some key concepts:
1) According to Keynes, the equilibrium level of national income and employment is determined by the interaction of aggregate demand (C+I) and aggregate supply (C+S). This equilibrium is called the effective demand point.
2) Effective demand represents the total spending in the economy that matches aggregate supply. It is the level of income and employment where there is no tendency to increase or decrease production.
3) The effective demand point may be below full employment, indicating underemployment. Government spending can increase aggregate demand and move the economy to a new equilibrium with higher income and full employment.
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Similar a Cartel
Oligopolistic markets mba assignment-2016
1. The document discusses various theories of oligopoly market structure, including game theory, the kinked demand curve theory, the Bertrand model, cartel theory, and Cournot's model.
2. Game theory and the kinked demand curve theory explain why firms in an oligopoly may choose to advertise or keep prices rigid. The Bertrand model analyzes price competition between firms producing homogeneous goods.
3. Cartel theory discusses how firms may coordinate production and prices to behave like a monopolist. However, cartels are unstable due to incentives for members to cheat.
4. Cournot's model analyzes duopoly competition through strategic output decisions. It remains a standard tool but
Opec is an example of
OPEC is an example of a cartel. A cartel is a formal agreement among competing firms in an oligopolistic industry to fix prices, marketing, and production to increase profits by reducing competition. OPEC is the most well-known international cartel, with its members regularly meeting to decide each country's allowed oil production levels. As the largest oil producing and exporting cartel, OPEC functions to enforce production quotas among its members and influence global oil prices through coordinating supply.
Economics
1. The document discusses different types of market structures in economics including exchange economy, monopoly, oligopoly, and monopolistic competition.
2. An exchange economy refers to an interaction between agents who can exchange products based on a price system. There are two types - pure exchange economy and exchange economy with production.
3. A monopoly is dominated by one firm/entity and has no competition, which can lead to high costs for consumers. Oligopoly has a small number of firms that generate the supply and are interdependent on each other's actions. Monopolistic competition combines elements of monopoly and competition through product differentiation.
Market Structure
The document discusses different market structures including perfect competition, monopolistic competition, oligopoly, and monopoly. It examines factors that determine market structure such as the number of firms, product differentiation, control over price, and barriers to entry/exit. Market structure influences firms' pricing and output decisions. The document also explores topics like non-price competition, government regulation, and balancing private vs public interests.
Principles, Tools, and Techniques; and Various Market Structures; Contemporar...
Very informative and students will learn more because more activities to be answered
Collusion in oligopoly
Collusion occurs when rival firms secretly agree to work together to set higher prices and make higher profits. This usually involves restricting output to increase prices faced by consumers. There are two main types of collusion - formal collusion through explicit agreements like cartels, and tacit collusion through informal understandings without direct communication. While collusion leads to higher profits for firms, it is generally considered harmful as it results in higher consumer prices, less innovation, and barriers to new firms entering the market. Cartel arrangements also tend to be unstable over time.
Oligopoly market
An oligopoly is a market structure with few dominant firms. Firms in an oligopoly are interdependent and must consider competitors' reactions when setting prices or strategies. While competition can occur, oligopolies sometimes engage in collusive behavior such as tacitly setting prices to maximize profits, restricting output. Examples include industries like airlines, banking, and brewing.
Cartels
Cartels are groups of companies that agree to limit competition by controlling production or sale of a product to influence market prices. While cartels aim to raise profits, they negatively impact consumers by increasing prices, restricting output, and dividing up markets. Successful cartels require all members to agree on price and production levels, prevent cheating, and maintain contact. Historically, De Beers' control of the global diamond supply through the Central Selling Organization was a highly successful cartel. However, most cartels ultimately fail due to members cheating and lack of coordination.
1b kno how on mkt structure
Market structures are determined by the number of firms, barriers to entry, product homogeneity, level of knowledge sharing, and interdependence between firms. Key characteristics include whether the market has one firm (monopoly), a few large firms (oligopoly), or many small firms (perfect competition). Barriers to entry, branding, and imperfect knowledge can influence market structure by affecting competitiveness. The structure impacts pricing, profits, and economic efficiency.
Oligopoly and Collusion
1) Collusion between businesses aims to maximize joint profits by restricting output and fixing higher prices. This lowers costs from competition but reduces uncertainty.
2) When there are a few dominant firms in an oligopoly, they can engage in restrictive practices like price fixing through cooperation. This allows them to set prices above costs for higher profits.
3) Price fixing cartels are more likely to form when industries have weak regulation, communication between firms is good, and products are standardized, making coordination easier. However, cartels are unstable due to incentives for some firms to cheat and overproduce.
Eu merger
The document discusses European Union competition law regarding mergers. It defines different types of mergers like horizontal, vertical, and conglomerate mergers. It explains the purpose of merger control is to maintain competition and prevent the formation of monopolies that could harm consumer welfare. Merger control evaluates whether a merger could allow the merging companies to unilaterally exercise power over the market and reduce competition. Theories of potential competitive harm from mergers include unilateral or non-coordinated effects where competition between the merging companies' products is eliminated.
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It is more permanent or occurs more frequently than the sporadic form of dumping but less than persistent form of dumping. The main objective of is to price products in such a way that local competition in the destination country is completely destroyed.
https://efinancemanagement.com/investment-decisions/predatory-dumping
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The document discusses the conditions of perfect competition in markets. It explains that perfect competition requires: many small businesses with similar products; low barriers to entry and exit; perfect information; and buyers and sellers that are price takers. However, most industries exhibit imperfect competition instead, with market structures like monopoly, oligopoly, and monopolistic competition that have some control over prices. The benefits of perfect competition are economic efficiency and prices that benefit both consumers and businesses.
Busienss combinations & SEZ-1.pptx Rutvi
This document provides an overview of business combinations, including:
- Business combinations involve two or more independent business entities joining together for specific purposes like mergers, acquisitions, or pools.
- They are common due to factors like avoiding wasteful competition, achieving economies of scale, gaining monopoly power, and business cycles.
- There are different types of business combinations including vertical, horizontal, lateral, and circular combinations. Pools and cartels are also forms of business combinations that aim to regulate prices and production among member firms.
- Governments may encourage or require certain combinations to promote efficiency or social interests.
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Monopolistic competition and oligopoly are two market structures between perfect competition and monopoly. Monopolistic competition is characterized by many firms with differentiated products. Firms have some market power but no barriers to entry or exit. Oligopoly is characterized by a few dominant firms where the behavior of one firm depends on its competitors. Game theory is used to analyze strategic interactions among oligopolistic firms.
9.competition and monopolies
The document discusses perfect competition and its five conditions: many buyers and sellers, similar products, easy market entry and exit, perfect information, and price-taking behavior. It provides examples of industries that approach perfect competition like agriculture. Perfect competition maximizes economic efficiency but is rare to achieve. Most industries exhibit imperfect competition characterized by monopoly, oligopoly, or monopolistic competition.
Chapter7.ppt
The document discusses different market structures including perfect competition, monopolistic competition, oligopoly, and monopoly. It provides details on the key characteristics of each structure such as the number of firms, level of control over prices, and examples. Perfect competition has many small firms, undifferentiated products, no control over prices or barriers to entry. Monopolistic competition has many firms but differentiated products giving some control over prices. Oligopoly has a few dominant firms that can influence prices through collusion. Monopoly has a single firm with complete control over prices.
44
This document summarizes key concepts around market power, monopoly markets, competitive markets, and mergers and acquisitions. It defines market power as the ability to control prices and subdue competitors. A monopoly is described as a single firm controlling an entire market. Competitive markets have many small buyers and sellers of identical products. The document then lists arguments for and against monopoly and competitive markets. It provides an overview of Bangladesh's economy and major industries like agriculture, manufacturing, and the textile sector. Finally, it discusses mergers as the combining of firms and acquisitions as one firm buying another, along with reasons for and risks of mergers and acquisitions.
There are a multitude of risks and issues for corporations and.docx
There are a multitude of risks and issues for corporations and industries
operating in the international environment. No doubt, issues such as
inferior quality of products manufactured by companies that engage in
outsourced production, or the use of chemicals in the manufacturing
process of edible products imported back to the U.S., which our regulatory
system considers toxic and which are regulated against within our own
borders. These types of issues can result in a tremendous impact to a
corporation's bottom line, from the financial impact to sales to brand
damage that diminishes their reputation in the marketplace.
Why does a company need to grow?
Suppose you started a company using an innovative product idea you
designed and your corporation was the first one to market and sell this
exciting new product in your home country. Sales immediately took off and
your company found itself growing and branching out in cities all across
your nation. Soon, competitors followed your leadership position, chasing
your market and successfully absorbing some of your sales. In order for
your firm to remain the leader, or to even continue to survive, you would
need to develop strategies that allowed your firm to continue to grow its
market share. If you failed to maintain your market position, over time you
could lose enough of your customer base so as to become unable to
financially continue to stay in business. Not only would you close your
doors, but your employees would lose their jobs.
Corporations spend a large amount of time developing strategies that allow
them to remain competitive in the marketplace, earning profits and re-
investing them into the business in order to grow. When a firm reaches a
saturation point in its home market, one strategy it can deploy to remain
profitable is to move into the global marketplace. The key to remaining
competitive is to constantly, and continually, innovate. For global firms,
innovation is exponentially more challenging.
Profit and Loss - What are they and how do
they impact global strategies?
In order to develop sound global strategies, it is critical to understand
profitability. Simply put, profitability means the degree to which a
corporation has been successful at earning revenues and managing
expenses. The difference between its revenue and its expenses is called
the net profit and the ratio of net profit to revenue is called a net profit
margin. Net profits and net margins are tracked and monitored carefully by
a firm's finance department, along with all other financial data Net margins
reflect how much of each dollar earned by the company has been
translated into profits and is determined by dividing the net profit by
revenue.
While some industries operate on very low, or thin, margins, others operate
on much higher margins. Understanding a firm's finances and industry
profitability norms, assists financial experts in assessing the health of the
firm, a ...
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Chapter 2
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Cartel
- 2. What is cartel ? Types of cartel. Facts of cartel. How cartel fail. How cartel success. How cartels causes inefficiencies in the market. Cheating. Market sharing cartel. OPEC. Conclusion.
- 3. A cartel is an organization created from a formal agreement between a group of producers of a good or service to regulate supply in order to regulate or manipulate prices. A group of parties ,nations or factions united in a common cause.
- 4. Agreement between different parties Cartel
- 5. Maximum profit Source of power formerly independent companies who overtly agree to work together. Objectives of cartels are to increase their profits or to stabilize market sales . They do this by fixing the price of goods, by limiting market supply or by other means.
- 6. Cartels are created when a few large producers decide to co-operate with respect to aspects of their market. Once formed, cartels can fix prices for members, so that competition on price is avoided. ... Restricted output – members may agree to limit output onto the market, as with OPEC and its oil quotas.
- 8. Firm’s don’t cooperate due to lack of trust Produce extra output Firm’s cheat
- 9. Cheating can be detected and prevented Low organizational cost Cartel should have complete market control Low expectation for serve government
- 10. High entry barriers when the country’s sovereignty is at stake. when one of the members has complete control over the market. Less number of competitors drives the market prices .
- 12. Provides monopoly Products can be sold at higher margins The cost of advertising is reduced Production efficiency. Reasonable margin. Big savings. No individual role
- 13. Individual monopolies affect disposable incomes of customers. Create Inefficiencies in the market full regulation over the member No motivation Demand will fluctuate The individual members are not able to scale up The distribution of profits is decided by the central agency of the cartel.
- 14. Protected by US OPEC 12 PARTNERS OPEC the world Largest cartel Mechanism for implementing production restriction
- 15. PSMA Pakistani sugar mill association Create an illegal monopoly Enforce high level of fake prices for sugar
- 16. Cartel is a market type structure Cartel is illegal The only legal cartel in the world is OPEC Cartel mostly fail because firms don’t cooperate due to lack of interest
- 17. Cartel agreements are unstable Once a cartel broken, it may incentive to reform or return in old condition Cartel do not abolish competition but regulate it. Cartel is not much beneficial for customer or household.