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Essay / Research Paper Abstract
This 7 page paper answers a set of 5 questions concerning the government involvement in markets and management of firms. The paper starts by looking at how and why government regulation takes place, as well as looking at the rationale for government intervening in markets. The paper then looks at the financial challenges for large firms, such as railways undertaking organic growth rather than making acquisitions. The principle-agent theory is then outlined and the paper finishes by examining the reasons why firms need to balance long term strategies and investment with short term return policies. The bibliography cites 9 sources.
Page Count:
7 pages (~225 words per page)
File: TS65_TEgovintermar.doc
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Unformatted sample text from the term paper:
of regulations; these may include the desire to protect or support particular stakeholder, this may include public interest, interest groups and capture theory (Posner, 1974). It is notable that n
different markets and with different industries it is possible that requested and sought or resisted by industries which are regulated depending on the proposed regulations (Stigler, 1975). The key
resource of characteristic that can be brought to industry by government regulation tools is the ability to coerce. The regulation and control exercised may be used to develop and protect
an industry, allowing it to develop, with positive support such as subsidies. For example, US domestic airlines received subsidies for airmail of $1.5 billion up until 1968; this was paid
even where airlines did not carry mail (Stigler, 1975). The regulation may help or direct the way in which an industry grows and becomes established (Stigler, 1975). In the early
days of an industry the reduction and protect the industry and allow it to grow and establish itself. In a recently liberalised market the regulations may be in place to
create a competitive environment. For example, there may be price controls to prevent a former incumbent monopoly from reducing prices to chase off potential competition (Nellis and Parker, 2006). This
provides some protection for new entrants, and it may be argued is likely to be good for the industry in the long term as competition forces firms to compete, which
may include increasing operational efficiency and innovation, which may also be good for the consumer. A thriving industry is also beneficial for the government ion generating taxations revenues; these
may be seen as public interest issues (Posner, 1974). Regulation may also be in place to protect the consumer, this helps to address the asymmetry of power and interests
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