Market Economy Essay

1857 words - 8 pages

Name: Jane Holman Student Number: 220034259 Unit: MM 302 Assignment: Assignment one - essay Due Date: 20 August 2010

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Introduction
The following report goes into detail about the governments involved in a market economy, the government influences four main areas in the economy which are; enforcing antitrust laws, preserving property rights, providing a stable fiscal and monetary environment and preserving political stability. Also the report will cover why there can never be a truly ‘free market’ economy, where there is absolutely no government intervention.

Market Economy
In a market economy, the majority of a nation’s land, factories, and other economic resources are privately ...view middle of the document...

Australia is no except to this with the government having an important role in the market place, theses roles include enforcing antitrust laws, preserving property rights, providing a stable fiscal and monetary environment, and preserving political stability (Wild, Wild & Han 2010:151). The government enforces theses roles by using statutory authorities. Enforcing antitrust laws is an important government role, to protect the consumers and also the growth of the economy. Antitrust laws regulate trade and commerce by preventing unlawful restraints, price fixing, and monopolies, to promote competition and to encourage the
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production of quality goods and services at the lowest prices, with the primary goal of safeguarding public welfare by ensuring that consumer demands will be met by the manufacturing and sale of goods at reasonable prices (Hartman 1997:1). Antitrust laws are applied to the market economy on the belief that free trade benefits the economy, businesses and consumers alike, the law forbids several types of restraint of trade and monopolisation. Theses fall into four main areas; agreements between competitors, contractual arrangements between sellers and buyers, the pursuit or maintenance of monopoly power and mergers (Hartman 1997:1). The Australian government has formed an independent statutory authority to help enforce the antitrust law; this authority is known as the Australian Competition and Consumer Commission (ACCC). The ACCCs main objective is to promote competition and fair trade in the market place to benefit consumers, businesses and the community, whilst also regulating the national infrastructure industries. It’s also responsible to ensure that individuals and businesses comply with the commonwealth competition, fair trading and consumer protection laws (Commonwealth of Australia 1995:1). The ACCC can be thought as a ‘watchdog’ for the Australian market place. It is important that the government plays a role in preserving property rights within a market economy. There is great value of having a well defined and strong legal system that safeguard individual and businesses property rights, as private property systems gives individuals the exclusion right to use their resources as they see fit. The control which individuals gain over their property leads users to take full account of all the benefits and costs of employing those resources in a particular manner. The process of weighing costs and benefits produces an efficient outcome which translates into higher standards of living for all (O’Driscoll 2003:1). Also by protecting individual’s property rights, government encourages individuals and companies to take risks such as investing in technology, inventing new products, and starting new businesses. This protection also supports a healthy business climate in which a market economy can thrive (Wild, Wild & Han 2010:151). The Australian legal system is responsible to uphold the law which in this circumstance is the...

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