Summary
The article illustrates the concepts adopted by business organisations with support from government at Federal, State and Municipal levels in containing competition. It demonstrates the manner in which the law may be employed selectively to protect the interests of these business often to the disadvantage of the society and the general consumer market. The article supports their argument employing examples from America and its neighbors. Some of the glaring examples include the government legislation that effectively caps the number of universities in each state that can offer law, the capping of the number of taxi cabs that can operate in New York City, the jurisdiction conferred upon judges to set the limits of bankruptcy fees charged by paralegals, among other illustrations.
Discussion questions
While operating in a business I would encourage competition through the free entry of competitors. This would be informed by the belief that competitors enhance the industrial performance and motivates businesses into efficiency and innovation. It would, therefore, mean that entry of competitors into the market would serve to improve the business standards and competencies. A god example can be seen in the Postal industry in America. The introduction of FedEx enhanced the postal industry bringing on board efficiency and effectiveness. It would be against my principles to apply legal means in attempts to prevent competition. On the contrary, I would seek an interpretation of the law that provides for fairness in every line in the business.
Even though the two approaches achieve the same end result, the difference is still glaring. The concept of offering lower prices and better service is ethical and stable with a long term bearing to it. In addition, it looks into satisfying the interests of the consumers by enabling them enjoy better and lower prices and improved qualities. These benefits are absent in the concept of employing laws that raised the competitors prices. It only communicates down to increased pricing for the consumers and leads to the development of hostility in the market. The New York jitneys case can be used illustratively. While the intention was to introduce jitneys which would be more convenient and cheaper for the New York citizens, the application of the discriminative laws has only boiled down to an inefficient transport system that is expensive and insensitive to the interest of City residents. The prevention of competition from a government level reduces with the Federal government accounting for the bigger portion followed by state and lastly local government. This pattern can be explained in two reasons. One, the local government is more proximate to the people and would want to indulge in policies that are in the interest of the citizenry. On the other hand the Federal Government is much alienated from the people with most of its policies being influenced by interest groups and lobbyists. This exposes them to a pattern of facilitating policies that are less people friendly but tailored to address interests from lobbyists. The State government is at an intermediate position being subjected to pressure from both lobbyists and interests groups on one hand and the citizenry and activists on the other. Secondly, local government elections are more regularly forcing the leadership to cater for the public interests in the fear for their political lives, on the other hand, Federal elections are less regular and affected by a different set of factors other than the attendant regulation of competition.
There exist a slight difference between the prohibition of entry by a group of firm and imposing a tax levy on the same group. The difference lies in the fact that while the former is purely protectionist in nature and effectively kills any rivalry, the latter is less protectionist and gives the group a chance to impact positively in the market despite the lower returns due to levies. It can also be said that while the former is non permissive and introduces impossibilities, the latter is discouraging and only introduces challenges in the form of costs.
References
Davenport, T. H., Cohen, D., & Jacobson, A. (2005). Competing on Analytics. Babson Executive Education, 1-12.
Keeping the Competition Out . (n.d.). The Economics of Public Issues . Retrieved from http://classweb.gmu.edu/sgillesp/Homework/Home14Article.htm
Robinson, C. (2008). Competition and Regulation in Utility Markets. New York: Edward Elgar Publishing.
