Each year the Royal Economic Society runs a prestigious essay competition, providing students with the chance to go beyond the straight-jacketed exam approach and when successfully commended impress top Universities. The details for this year can be found here: For EdxcelAS and A2 students I have indicated possible exam questions that could be linked to these questions - as a good starting point.
Guide to Antitrust Laws Competitive Effects The law bars mergers Tutor2u essay competition the effect "may be substantially to lessen competition or to tend to create a monopoly.
Horizontal Mergers There are two ways that a merger between competitors can lessen competition and harm consumers: In either case, consumers may face higher prices, lower quality, reduced service, or fewer choices as a result of the merger.
Coordinated Interaction A horizontal merger eliminates a competitor, and may change the competitive environment so that the remaining firms could or could more easily coordinate on price, output, capacity, Tutor2u essay competition other dimension of competition.
As a starting point, the agencies look to market concentration as a measure of the number of competitors and their relative size. Mergers occurring in industries with high shares in at least one market usually require additional analysis. Market shares may be based on dollar sales, units sold, capacity, or other measures that reflect the competitive impact of each firm in the market.
The overall level of concentration in a market is measured by the Herfindahl-Hirschman Index HHIwhich is the sum of the squares of the market shares of all participants. The larger the market shares of the merging firms, and the higher the market concentration after the merger, the more disposed are the agencies to require additional analysis into the likely effects of the proposed merger.
During a merger investigation, the agency seeks to identify those mergers that are likely either to increase the likelihood of coordination among firms in the relevant market when no coordination existed prior to the merger, or to increase the likelihood that any existing coordinated interaction among the remaining firms would be more successful, complete, or sustainable.
Successful coordination typically requires competitors to: Firms may prefer to cooperate tacitly rather than explicitly because tacit agreements are more difficult to detect, and some explicit agreements may be subject to criminal prosecution.
The FTC challenged a merger between the makers of premium rum. The maker of Malibu Rum, accounting for 8 percent of market sales, sought to buy the maker of Captain Morgan's rums, with a 33 percent market share.
The leading premium rum supplier controlled 54 percent of sales. Post-merger, two firms would control about 95 percent of sales. The Commission challenged the merger, claiming that the combination would increase the likelihood that the two remaining firms could coordinate to raise prices.
Although a small competitor, the buyer had imposed a significant competitive constraint on the two larger firms and would no longer play that role after the merger. To settle claims that the merger was illegal, the buyer agreed to divest its rum business.
Unilateral Effects A merger may also create the opportunity for a unilateral anticompetitive effect. But a merger may also allow a unilateral price increase in markets where the merging firms sell products that customers believe are particularly close substitutes.
After the merger, the merged firm may be able to raise prices profitably without losing many sales. Such a price increase will be profitable for the merged firm if a sufficient portion of customers would switch between its products rather than switch to products of other firms, and other firms cannot reposition their products to entice customers away.
The FTC challenged the merger of two makers of ultrasonic non-destructive testing NDT equipment used for quality control and safety purposes in many industries. For many customers, the products of the merging firms were their first and second choice, and evidence showed that the two firms were frequently head-to-head rivals.
The merger would have eliminated this beneficial competition on pricing and innovation. To settle the FTC's claim that the proposed merger was illegal, the companies agreed to divest the buyer's NDT business. Vertical mergers can generate significant cost savings and improve coordination of manufacturing or distribution.
But some vertical mergers present competitive problems. For instance, a vertical merger can make it difficult for competitors to gain access to an important component product or to an important channel of distribution. This problem occurs when the merged firm gains the ability and incentive to limit its rivals' access to key inputs or outlets.
The FTC challenged the combination of an ethanol terminal operator and a gasoline refiner. Refiners need ethanol to create specially blended gasoline, and before the merger, an independent firm with no gasoline sales controlled access to the ethanol supply terminal.
After the merger, the acquiring refiner could disadvantage its competitors in the gasoline market by restricting access to the ethanol terminal or raising the price of ethanol sold to them, which would reduce competition for sales of gasoline containing ethanol and raise prices to consumers.
As part of a consent agreement, the FTC required the merged firm to create an informational firewall so there could be no preferential access or pricing for its refining affiliate. Potential Competition Mergers A potential competition merger involves one competitor buying a company that is planning to enter its market to compete or vice versa.
Such an acquisition could be harmful in two ways. For one thing, it can prevent the actual increased competition that would result from the firm's entry. For another, it would eliminate the procompetitive effect that an outside firm can have on a market simply by being recognized as a possible entrant.
What accounts for that effect? The firms already in the market may avoid raising prices to levels that would make the outside firm's entry more likely.The RES has announced details of its popular annual essay competition for A Level Economics students.
Essays should be a maximum of 1, words excluding references. Students should focus on economic analysis and include references. The competition is open to Year 12 and Year 13 students.
Students can only submit one essay. Related Links Annual Public Lecture Essay Competition RES Training Schools PhD Meetings Economics Network.
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Figure schwenkreis.com from schwenkreis.com PerfectCompetition - Economics of Competitive Markets. [online] A market similar to perfect competition is monopolistic competition where the freedom of entry is has no restrictions to this market.
$2k for Words Essay Competition. Current round closed: 1 Sep Enter the $2, for Words essay competition now. Live round always happening. Open to university and college students (all levels).
Click on green ‘ENTER NOW’ post below. Words 3 Pages. Price Wars Essay the state, the competition, the condition of the industry and the quality of the product. Through this a company is capable of determining their profitability which then may determine how they can generating appropriate amount of income that will support their operation.
(Tutor2u, schwenkreis.comt competition - the economics of competitive markets) The market may allow firms to make abnormal profit in the short run, but only temporarily.