COMM 394 Study Guide - Final Guide: World Trade Organization, North American Free Trade Agreement, Bid Rigging
Document Summary
Gains from free trade: welfare gains, economies of scale, competition, efficiency gains enhances consumer choice and stimulate innovations, new technology, rise in living standards. Reasons for government intervention: raising revenue, non economic objectives, exploiting market power in world markets, the infant industry argument, profit shifting, domestic redistribution. Market failure 6 investigations: mergers and abuse of dominant position, conspiracy to lessen competition, predatory pricing, price discrimination, resale price maintenance and refusal to deal, misleading advertising and deceptive marketing practices. Economies of scale the cost advantage that arises with increased output of a product. Economies of scope average total cost of production decreases as a result of increasing the number of different goods produced. Mergers are subject to review by commissioner of competition (cid:0) must be notified of all mergers that exceed certain size thresholds prior to competition. Merger occurring between companies in the same industry (common in industries with fewer firms, market share gain is much greater)
