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Page 1

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JAN 2010
Di
scuss
the
eff
ecti
veness
of
the
C ompet
it
ion
Commissi
on i
n r
egulat
ing
indust
ri
es
· Role of Competition Commission)
· Application to an industry
· Specific types of regulation or powers of the CC
· Enterprise Act 2002 e.g. the…

Page 2

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Evaluation :
It may be harder to make further increases in efficiency; all firms trying to engage in
R&D
Depends on PEDs
There may be retaliation, e.g. price war
Short term/long term success
Investment /R&D is expensive and there is no guarantee of success.
Improving product quality is expensive
Marketing…

Page 3

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· Increased job security as profits rise
· Higher wages/perks
· Share options increase in value
· More scope for promotion in larger firms
· Allow non worsening situation as being in the interests of employees

Evaluation:
· Greater possibility of collusion to raise prices
· Less incentive to innovate…

Page 4

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· Critical assessment of game theory e.g. game theory leads to lack of competition
not a way to compete
· Critical assessment of the method of competition
· Game theory shows that the worst outcome might be reached as illustrated by
problems of Prisoners' Dilemma or price war
· What…

Page 5

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· Demand for in shops less price elastic than demand for the product in
supermarket
· establish its brand in the market i.e. market penetration pricing
· Potential economies of scale in production
· Low costs of marketing on entry
· To under-price competition
· Recession ­ have to keep…

Page 6

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Evaluation:
· It is too early to say.
· Difficult to know outcomes in game theory, or other game theory critique, e.g. kinked
demand curve to show sticky prices
· Award game theory responses as more than one point, e.g. price war
· Depends on changing income in a recession…

Page 7

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·
Quali
ty
ma y
b e red u ced as
a
cost
cutt
in g
me a su re
·
I
t
dep ends
on t
he q u al
it
y of
t
he new
pro ducts
as t o
t
he ext
ent
of
th e be…

Page 8

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r
educe co st
s
·
Comp etit
ion
migh t
be
w ast
eful
,
e.g.
t
he economi
es
of
scal
e a r
gume nt

·
Asymme tr
ic i
nforma t
ion
in
the
buyi
n g
of
healt
hcar
e
Pr
o duct
s

T…

Page 9

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l
evel o f
comp eti
ti
on betwe en
lar
ge and powerf
ul
f
i
rms
·
Bran d l
o yalt
y may l
imit
t
h e success
of
comp et
ition
pol
icy
·
Si
g n i f
i
c ant
be nef
it…

Page 10

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Assess
how
the
new l
y combined
indust
ry
company
c oul
d i
ncrease i
ts
share
of t
he market
i
n compet
it
ion
w it
h ot
he r
f
ir
ms .
Refer
t
o game
theor
y i
n your
answer
.
·
use…

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