Competition EC 8 Lap

Objectives Competition defined Types of competition Monopolies Legislation affecting competition Effects of competition

A competition is when people try their best to do something better than other people so they can win.

What is Business Competition? A rivalry between two or more businesses in the market place to attract customer dollars

1.Consumers have more choices of goods and services 2.Competition often leads to lower prices Competition Tutorial

Direct Competition When two or more businesses sell the same or similar goods or service

Indirect Competition Businesses that offer dissimilar goods or services. But are still competing for consumer money

Price –Use prices to attract customers Sales Rebates –Offering part of money back Price Matching –Charge same or lower Discount coupons

“Factors Not Based On Price” Product –High quality products –New features –Variety Promotion –Trained friendly staff –Good customer service Place –Convenient Do you have the New I-Phone yet?

Monopoly- There is only one supplier of a good with no substitutes available I’m rich. I’m the only maker of office supplies Stop monopolies aren’t allowed

Government Role in Consumerism

Monopoly Government only allows regulated monopolies. Utilities only monopolies –Closely supervised –Must get permission before raising prices

Purpose of Government Involvement Provide public goods Improve pubic welfare Protect public health Stabilize the economy Protect specific businesses Conserve the environment Protect consumers Protect competition Regulate working conditions Protect business property

Federal Trade Commission Federal Trade Commission Enforce laws to prevent price fixing, to prohibit unfair competitive practices, and regulate false or deceptive advertising.

Government antitrust laws Sherman Antitrust Act 1890 – Regulates Price fixing Clayton Act prevents specific types of business actions: –T–Tying agreement- you must purchase something else with the purchase of a good –E–Exclusive agreement- prohibit you from purchasing from their competitors

Government Legislation Robinson -Patman Act prohibits price discrimination – can’t offer different prices to different customers for same product. Celler Kefauver Antimerger act 1950 –Protects competitors from take over if it will hinder competition- preventing monopolies

Regulatory Laws Wheeler Lea Act Prohibits deceptive advertising of prices. Cannot advertise your prices are lowers unless they truly are. Misleading ADS Unit Pricing Law Retailers must display pricing that show the price of an item per unit Encourage comparative pricing. 15 oz at 2.99 = 20c oz 32 oz at 4.29= 13c oz 2.99 = = 13 32

Regulatory Agencies The Federal Communications Commission (FCC) Regulates interstate and international communications by radio, television, wire, satellite and cable. The (FDA) Foods and Drug Administration Regulates and supervises food safety, tobacco products, dietary supplements, prescription and over-the-counter pharmaceutical drugs

CPSC Consumer Product Safety Commission Protect "against unreasonable risks of injuries associated with consumer products, buy regulating the sale and manufacturing of consumer products

Buyers Vs. Sellers Businesses are sellers –They sell goods and services to make money People who pay for goods and services are called buyers.

Competition effects on producers Competition effects on business Provide better services Provide wider selection Lower prices Better quality products New or newer products Choices/ places to buy from Lowers production cost

Buyers & Sellers interact to determine best price Free enterprise system Enjoy high standard of living Newer and safer products Lower costs