ADMS 1000 Lecture Notes - Laissez-Faire, The Public Interest, Air Canada

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ADMS Notes CH.8
The Canadian Business Enterprise System:
Fundamental Features:
All companies have some sort of economic or business enterprise system:
o What goods and services are produced and distributed to society
o How the goods and services are produced and distributed
Capitalism: economic system based on following principles:
o Rights of individual
Individuals have own rights to pursue own self-interests(ie: profits)
Gov’t regulations enforce rules that effect how business owners conduct
their affairs(gov’t guidlines of candidate selction)
o Rights of private property
Taxation-redistributing wealth in society
Whether a product should be nationalized Gov’t or not
Ie: health care
o Competition
Goal of capitalism
o The Role of the gov’t?
Laissez faire
Or gov’t restrictions
Gov’t as guardian of society:
Tax Collector Role:
o Revenue taxes
Individuals taxes
Corporations
o Sales tax
Gst
o Property Tax
o Restrictive Tax
Goods(alcohol and tobacco)
Crown Corporation
o Crown Organization: accountable through a minister to parliament
Implements public policy and safeguards national interests:
Air Canada and Petro for transport national interest
To protect vital industries to economy:
CNR: safeguarded gov’ts largest investments in railways
Special services that couldn’t be done by private businesses:
Air Canada established after no company could take the
risk and plunge
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ADMS Notes CH.8
Bank of Canada as well controlled by Gov’t to regulate
monetary operations in CAN
To nationalize industries considered to be ‘natural
monopolies’
Electricity: grids too large to be a privatized company; so
gov’t intervenes
LCBO: largest single retailer
o Cons to Privatizing: increased crime and alcohol
abuse
o Pros to Privatizing: jobs created, better locations
The Regulator Role:
o Gov’t economic regularities:
Impositions of constraints to modify economy
Ex: Food and Drug acts, Hazardous Products
o Imperfect Competition:
Business supply responsive to consumer demand
By allowing individuals to follow self interest they’ll be
responsive to consumer needs and capability of the environment
Business aim to reduce competition as a means of prospering and
succeeding
Consequently inefficient businesses will remain, and consumers
will be forced to accept those types of products or services, at
prices dictated by those businesses
Overall society is offered fewer goods they really want, as
opposed to high competition which is good
o The Public Interest:
CRTC-canadian radio tv and telecoms
Regulates telecoms’ industry and its carriers (ie: Bell )
Responsible for broadcasting licences, requiring other
companies to conform to the standards
Competition Burea 8.4:
Fair competition:
o Economy works more efficiently
o Adaptability to global markets
o Chance for newcomers
o Consumer choice and competition
o Balances interests of all players
Price Fixing
Bid Rigging: prearranged biddings illegal
Misleading rep: false ads
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