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Essay / Research Paper Abstract
This 3 page paper looks at why government policy makers should be concerned by high levels of concentration in any industry. The paper discussed the potential negative impacts of high concentration levels and uses examples to illustrate points raised. The bibliography cites 3 sources.
Page Count:
3 pages (~225 words per page)
File: TS14_TEconcengov.rtf
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Unformatted sample text from the term paper:
has to be traversed where any two large firms are proposing a merger or an acquisition if it is deemed that it will give the firm a high level of
control over the market. There are a number of political policies seen throughout the globe that appear to seek to reduce concentration in different industries. The question is should
governments really be concerned where there are industries with a high level of concentration. There is a general political and theoretical agreement
that free competition will usually be good for consumers and for firms, the need to compete will help contain prices as consumers have choices regarding which suppliers to choose and
the competitive pressures to attract buyers will help drive forward innovation and development in order to gain competitive advantages, such as differentiation or cost (Thompson, 2007). There is some
evidence from some industries that there may be some agglomeration advantages where there is a high level of concentration, but this appears to be very limited and can apply to
spatial concentration more than structural concentration (van Egeraat, 2006). Where there is a high level of concentration, it is quiet possible that
rather than the advantages seen in industries where there are competition there will be the opposite disadvantages suffered; such as a lack of innovation, and no downward pressure on prices.
In the short term the damage may only be higher prices paid by consumer, especially if there is explicit or tacit price fixing between those firms that control the industry.
This can have a knock on effect, as high prices in one segment reduce disposable income available to other segments, and as such may decrease demand, so there can be
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