market failure
when does this happen?
or
Recent examples of this:
HMV market failure
An economic term that encompasses a situation where, in any given market, the quantity of a product demanded by consumers does not equate to the quantity supplied by suppliers. This is a direct result of a lack of certain economically ideal factors, which prevents equilibrium
he social costs of producing the good or service (all of the opportunity costs of the input resources used in its creation) are not minimized, and this results in a waste of some resources.
A. consumers are uncertain as to what to buy in a free market economy
B. advertising makes consumers buy the wrong things in a mixed economyC. collective goods and services are not provided in a free market economyD. government interfere in the operation of markets in a mixed economy
Financial market failure
Cartels and collusions
Difference between a collusion and a cartel
collusion
Cartel
A cartel is a formal agreement along competing firms, its a formal orginisation which agrees to fixed prices, marketing and production.
A cartel is a formal agreement between companies to control the price of a commodity or product etc - like OPEC. Tacit collusion occurs when companies make an informal agreement to fix prices (i.e. they do this without letting their competitors or official bodies know). Your confusion might arise from the fact that members of a Cartel (an officially organised group) can still engage in unofficial agreements (tacit collusion), although it is usually firms outside a cartel
coca-cola - pepsi
supermarket-robinsons supermarket
south star-drug mercary drug
shell- caltex- petron
Collusion
agreement between parties to refrain in participating in an activity that they normally would in order to reduce competition and gain higher profits. its usually a secret agreement aongst competing firs usually in an oligopoly, to control the market, raise the market price and otherise act like a monopoly. It means working together when really they should be competing.
examples of this
Competition commision
EU Commission
EU Commission
EU Commission
Competition commision
The Competition Commission is a non-departmental public body responsible for investigating mergers, markets and other enquiries related to regulated industries under competition law in the United Kingdom. It is a competition regulator under the Department for Business, Innovation and Skills (formerly the Department for Business, Enterprise and Regulatory Reform). They ensure healthy competition between companies in the UK for the ultimate benefit of consumers and the economy.
The European Commission (EC) is the executive body of the European Union responsible for proposing legislation, implementing decisions, upholding the Union's treaties and day-to-day running of the EU.
The stabilization and development of Afghanistan is a major external priority for the European Union (EU). Since 2002 the European Commission (EC) has contributed some 1.8 billion EUR to Afghanistan. The thrust of EC assistance has gradually shifted from humanitarian assistance and support for reconstruction towards development cooperation aimed at supporting priorities set out in the Afghanistan National Development Strategy. To maximize impact of EC aid and to contribute to overall aid effectiveness, the Commission is also actively contributing to donor coordination.
Since 1990, Commission funding for ACP countries has risen steadily each year in real terms – and now it is spending more than ever before on aid for trade. Since 2001, more than €850 million of Commission funds have been used to help ACP regions to boost trade and integrate into the world economy.
Fairtrade
Fairtrade does not claim to solve rural poverty in developing countries but if helping poor households to tackle poverty is the ultimate objective of Fairtrade, it is reasonable to explore how far Fairtrade is achieving this in different situations. This extensive review of the literature, (which covers mainly coffee case studies) finds strong evidence that Fairtrade provides a favourable economic opportunity for smallholder farming families that are able to join farmer organisations and can provide products to market specification.
effects on businesses and the economy link below
effects on businesses and the economy
research what is meant by both negative and positive externalities and how coorporations can cause these. research specific exampes of occasions that this has occured.
Economics studies two forms of externalities. An externality is something that, while it does not affect the producer of a good,it does influence the standard of living of society as a whole.
A positive externality is something that benefits society, but in such a way that the producer cannot fully profit from the gains made. A negative externality is something that costs the producer nothing, but is costly to society in general.
Examples of positive externalities are environmental clean-up and research. A cleaner environment certainly benefits society, but does not increase profits for the company responsible for it. Likewise, research and new technological developments create gains on which the company responsible for them cannot fully capitalize.
Example of a positive externality that is derived from consumption is Education, and that from production is R&D. When society receives better education, this in turn will benefit the country as a whole as more foreign direct investments will flow into the country, thus increasing employment and income. When a company engages in R&D, the discovery of new production technology can be adopted by other firms in the industry.
Negative externalities, are much more common. Pollution is a very common negative externality. A company that pollutes loses no money in doing so, but society must pay heavily to take care of the problem pollution caused.
The problem this creates is that companies do not fully measure the economic costs of their actions. They do not have to subtract these costs from their revenues, which means that profits inaccurately portray the company's actions as positive. This can lead to inefficiency in the allocation of resources.
Because neither the market nor private individuals can be counted on to prevent this inefficiency in the economy, the government must intervene.
The government's basic goal is to force companies to internalize externalitycosts. This means that if a company's pollution creates economic costs (for example, the medical bill of a patient who gets sick from pollution), then the government will force the company to pay that cost. In this way, the company can more accurately compare revenues and expenses and decide whether production is indeed profitable.
Example of an externality that results from consumption is road congestion, and that from production is pollution. When society consume the "usage of roads", it will come to a point beyond which additional road user (driver) will cause third parties to incur some costs as the road started to get congested. When this happens, the employers of these drivers will suffer productivity loss due to them coming in late. When firms engage in the production of goods in their manufacturing plants, hazardous gases may be released into the atmosphere, thus leaving the society having to bear the brunt of additional medical costs.
Chinas coal consumption externalties
Fairtrade
Fairtrade does not claim to solve rural poverty in developing countries but if helping poor households to tackle poverty is the ultimate objective of Fairtrade, it is reasonable to explore how far Fairtrade is achieving this in different situations. This extensive review of the literature, (which covers mainly coffee case studies) finds strong evidence that Fairtrade provides a favourable economic opportunity for smallholder farming families that are able to join farmer organisations and can provide products to market specification.
effects on businesses and the economy link below
effects on businesses and the economy
research what is meant by both negative and positive externalities and how coorporations can cause these. research specific exampes of occasions that this has occured.
Economics studies two forms of externalities. An externality is something that, while it does not affect the producer of a good,it does influence the standard of living of society as a whole.
A positive externality is something that benefits society, but in such a way that the producer cannot fully profit from the gains made. A negative externality is something that costs the producer nothing, but is costly to society in general.
Examples of positive externalities are environmental clean-up and research. A cleaner environment certainly benefits society, but does not increase profits for the company responsible for it. Likewise, research and new technological developments create gains on which the company responsible for them cannot fully capitalize.
Example of a positive externality that is derived from consumption is Education, and that from production is R&D. When society receives better education, this in turn will benefit the country as a whole as more foreign direct investments will flow into the country, thus increasing employment and income. When a company engages in R&D, the discovery of new production technology can be adopted by other firms in the industry.
Negative externalities, are much more common. Pollution is a very common negative externality. A company that pollutes loses no money in doing so, but society must pay heavily to take care of the problem pollution caused.
The problem this creates is that companies do not fully measure the economic costs of their actions. They do not have to subtract these costs from their revenues, which means that profits inaccurately portray the company's actions as positive. This can lead to inefficiency in the allocation of resources.
Because neither the market nor private individuals can be counted on to prevent this inefficiency in the economy, the government must intervene.
The government's basic goal is to force companies to internalize externalitycosts. This means that if a company's pollution creates economic costs (for example, the medical bill of a patient who gets sick from pollution), then the government will force the company to pay that cost. In this way, the company can more accurately compare revenues and expenses and decide whether production is indeed profitable.
Example of an externality that results from consumption is road congestion, and that from production is pollution. When society consume the "usage of roads", it will come to a point beyond which additional road user (driver) will cause third parties to incur some costs as the road started to get congested. When this happens, the employers of these drivers will suffer productivity loss due to them coming in late. When firms engage in the production of goods in their manufacturing plants, hazardous gases may be released into the atmosphere, thus leaving the society having to bear the brunt of additional medical costs.
Chinas coal consumption externalties
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