Wednesday, 11 March 2020

Monopoly, Competition and Corporate Governance

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Monopoly, Competition and Corporate Governance


The firms compete on the basis of price, product quality, after-sale services, product delivery,
product information and positioning, advertising and associated services.
Competition is characterised by inter-firm rivalry, competitive strategies and the degree
of competition is closely related to number of firms in the market and the distribution of
market share between them.
Notes Before the 1991 amendment, the MRTP law sought to control the concentration of economic
power by requiring undertakings that had assets over 100 crores and/or were ‘dominant
undertakings’ to register themselves with the Monopolies and Restrictive Trade Practices
Commission.
The Commission can enquire into any restrictive, unfair or monopolistic trade practice
(a) upon receiving a complaint from any consumer or a consumers’ association, (b) on
reference made by Central or state government, (c) on an application made by DGIR,
(d) on its own.
The MRTP Act was implemented in keeping with India’s adopted political ideology of
socialism. Its basic objective was to restrict the concentration of economic power by
restricting and controlling the big companies, but in reality it only restricted and controlled
the growth of Indian economy.
The MRTP Act has been replaced by the competition Act 2002 on the recommendations of
the SVS Raghvan Committee.
The government affects business transactions and activities of an economy through a
system of controls and regulations. Fiscal and monetary policies constitute ‘indirect’ or
‘general’ controls; they affect the overall aggregate demand of the economy. In contrast,
there may be ’direct’ or ’physical’ controls; they affect particular choices of consumers and
producers.


Externalities: Activities and conditions whose benefits and costs are not reflected in the market
price of goods and services.
Monopoly: The existence of a single producer or seller which is producing or selling a product
which has no close substitutes.
Perfect competition: It is said to exist where there is a large number of producers (firms) producing
a same kind of product.
Price control: Restriction on maximum prices that is established and maintained by the
government.
Public policy: It is an attempt by the government to address a public issue
Restrictive Trade Practice: One which has, or may have, the effect of preventing, distorting or
restricting competition in any manner

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