Explain why government regulation is needed, citing the major reasons for government involvement in...

Question

Explain why government regulation is needed, citing the major reasons for government involvement in a market economy.

Justify the rationale for the intervention of government in the market process in the U.S.

Assuming that the merger faces some threats and that the industry decides on self-expansion as an alternative strategy, describe the additional complexities that would arise under this new scenario of expansion via capital projects.

Analyze how the different forces will come together to create a convergence between the interests of stockholders and managers.

Speculate about the implications for the goals of the firm as to whether to maximize the industry’s profits or to create more value for the shareholders.

Use at least three (3) high-quality academic resources in this assignment. Note: Wikipedia and other Websites do not qualify as academic resources

I am not looking for a complete paper, I'd like a general draft with some good academic resources to get me on track.I have attached my first paper.Thanks!

Document Preview:

[Type the company name]Economics Assignment 1Market Model Patterns of ChangeMiranda4/28/2012 Economics is a social science concerned chiefly with description and analysis of the production, distribution, and consumption of goods and services and so it is natural to assume that economics can be used to observe and analyze the patterns of change in different types of markets such as monopolies or oligopolies (Economics, 2012). A monopoly is exclusive ownership through legal privilege, command of supply, or concerted action while an oligopoly is a market situation in which each of a few producers affects but does not control the market (Oligopoly, 2012). In today’s market there are many examples of oligopolies ranging from airlines to cellphones, but one industry that stands out is information technology. It is easy to tell that information technology is changing by how often consumers are purchasing the newest laptop or the newest cellphone design and leading the information technologies market are the United States, Japan, South Korea and the United Kingdom. In the United States, IBM otherwise known as the International Business Machine is leading the industry followed by Verizon Wireless and Electronic Data Systems Corp, but they are not so far ahead that they could be considered a monopoly (Research and Markets, 2010) . With plenty of substitutes and competition in the mix, they remain as part of the oligopoly. The industry itself continues to grow and profit from new technologies, but any new companies looking to enter the market will find themselves faced with a challenge as these companies in the oligopoly could work together to keep new companies out. Looking at this industry in a market economy first requires an understanding of what a market economy is. A market economy is, “an economy in which most goods and services are produced and distributed through free markets or otherwise stated an economic system in which prices are...

005_c2ys8zk-kzvy04if.docx

Robert · Accepted Answer

Solution 
Expansion via Mergers in the U.S. IT sector 
Merger is a combination of two business units which were otherwise operating 
independently.  They can be vertical or horizontal mergers depending upon the relationship of 
the merging parties. If a firm merges with its suppliers or distributors, it is regarded as vertical 
merger while merging with another firm at the same level who was otherwise a competitor in the 
same market is considered as horizontal merger. The merger policy is aimed at harming the 
competitive nature of the market and maximizing economic power and control over the market. 
. The government monitors mergers and acquisitions taking place in the markets and have 
usually laid down statutes regarding the procedures to be followed so that the legality of the 
business after merger is maintained. The most common procedural requirements include 
submission of merger plans to the shareholders and obtaining their approval. The managers  
would also be required to obtain the certificate of merger for the new corporation. 
Rationale behind Government intervention 
IT industry is one of the fastest growing service sector industries in any economy today. 
The world of Information Technology is very well familiar with mergers and acquisitions which 
is one of the most dominating business strategies in the IT sector of not just in U.S. but around 
the world. More companies are eyeing mergers and acquisitions than ever before turning the 
market into an oligopoly. One of the most basic concerns of the government is that merging 
activities are aimed at eliminating competition. A competitive market will be more equitable and 
efficient from the point of view of social well-being of the society which the governments want 
to maximize. As the market is turning into oligopoly with giants like IBM, AT&T and Verizon, 
there is a natural barrier for new firms willing to enter the market. This gives substantial market 
power to the existing players to manipulate market variables. Thus the federal legislations have 
been interfering every now and then to check such anticompetitive mergers in the IT industry to 
avoid concentration of economic wealth and ensure free flow of services to the people. 
Considering Self expansion instead of merging 
Mergers and Acquisitions depend upon a number of industry related factors and market 
conditions. Market is the driving force behind such managerial decisions. Given the fact that the 
merging strategy might not be feasible in all situations either due to strong government 
regulations or lack of possibility of a consensus with the competitors, a possible alternative 
strategy to grow could be a self-financed expansion plan. But the same is not a very lucrative 
strategy given the nature of the IT industry and the number of complications involved while 
expanding independently. 
Market opportunities,

Explain why government regulation is needed, citing the major reasons for government involvement in a market economy. Justify the rationale for the intervention of government in the market process in...

Answer To: Explain why government regulation is needed, citing the major reasons for government involvement in...

Answer To This Question Is Available To Download

Related Questions & Answers

Submit New Assignment