Elements of Art. 81
Art. 81 * Art. 81 is a fundamental provision which is essential for the accomplishment of the tasks entrusted to the Community and, in particular, the functioning of the internal market. * Single market concerns have played a crucial part in the development of the Court's jurisprudence and sometimes this formalistic approach has been to the detriment of economic efficiency considerations. * In interpreting the provision the Court adopts a teleological approach construing Community acts in accordance with the broad system of Treaty aims and objectives set out in Art 2 and 3. * An appreciation of the tension between market integration and economic efficiency, and the close relationship between competition rules and the free movement of goods begins with the Court's seminal judgment in Etablissements Consten SA and Grundig v Commission. It confirms that market integration lies at the heart of art. 81. Art 81 does not only apply to horizontal but also to vertical agreements. Critics of the judgment consider that the existence of market power ids the real issue and argue that inter-brand competition would prevent Grundig's products from being sold at a high price. In Societe Technique Miniere the Court confirmed that market analysis is not necessary where the object of the agreement is clearly to restrict competition. Elements of Art. 81 Undertakings * This will include
'Critically assess the notion that 'corporatism' improves economic performance'. Does globalisation threaten or enhance corporatism? Under globalisation can we have corporatism given that corporatism is based on national based policies?
'Critically assess the notion that 'corporatism' improves economic performance'. Does globalisation threaten or enhance corporatism? Under globalisation can we have corporatism given that corporatism is based on national based policies? Few people agree on what the definition of corporatism is but in general it can be seen as the joint pursuit by employees and employers of their collective interest. It is a system of running a state using the power of organizations like businesses and labour unions that act, or purport to act, for large numbers of individuals. In the name of social justice and order, corporatism advocates a close collaboration between employers and workers under the direction of the state in all matters regarding conditions of work, wages, prices, production, and exchange. Its aim is to substitute "corporate" (that is, collective) considerations for the free play of the market and for competition. Corporatism involves centralised wage bargaining and besides wages, bargaining may also include government economic and social policies in which case the state is either formally or informally involved in the process. Under corporatism, the interests of individuals are collectively represented through particular groups. These are given explicit recognition by the state in its function of reconciling the competing demands of government policy. In return,
Explain how economists model how an increase in government expenditure can lead to a greater increase in national income.
Explain how economists model how an increase in government expenditure can lead to a greater increase in national income. Ans. National income is the total amount of wealth that accrues to the permanent residents of a country as a result of the production of goods and services within a country during the course of a year. It is important to measure national income because it shows whether the standard of living in a country is rising or falling and it can be used as a means of comparison between other countries. It is also useful to measure income against past income in the same country to see whether the economy is growing or declining. An increase in government expenditure is an injection in the circular flow on income. An injection is an addition to the circular flow of income. The diagram above illustrates some of the injections and leakages in the economy. It is however very important to find out exactly what will be the effect on the economy from an increase in injections. Economists do this by calculating the multiplier effect of the increase in the government expenditure on the economy. The multiplier indicates how many times that the injection of original spending circulates through a local economy. As a result of re-spending, it benefits the local people. The formula for calculating the multiplier effect is 1/(1-MPC). When there is an increase in the
"The costs of a faster rate of economic
"The costs of a faster rate of economic growth in the UK would exceed the benefits." Discuss. Economic growth is a sustained increase in total output or output per person for an economy over a period of time. For economic growth to be achieved, there must be an increase in either the quantity and/or the quality of resources. Economic growth usually occurs when there is a change some of the factors of production. The land can be utilised better with technological advances, and these can improve the company's output, causing economic growth. The size and quality of the labour force may increase. Among the possible causes of a rise in the sizes of the labour force are immigration, a rise in the retirement age and more lone parents entering the labour force. The two main causes of a rise in the quality of the labour force are improvements in education and training, a more educated and better-trained labour force will increase productivity. When a company invests in more capital this is used to help the company to advance, and would cause economic growth. The productive capacity of most economies increases each year. In industrialised economies this is due mainly to improvements in educational standards and advances in technology. In some developing economies it is also due to rises in the size of the labour force. We can predict how much the economy will rise. This is called the
CAPM and its significance
CAPM and its significance Introduction In almost every economics textbooks (Ben and Robert, 2001), economists tend to argue: everything's market price is determined by consumers' demand and supply in the market, the intersection of which gives us the long-term concept of 'market equilibrium'. Although it sounds straightforward, it is anything but easy in practice, especially when the assets (like common stock) you are measuring associated with risk and future uncertainties. Fortunately, economists and financial analysts have developed plenty of theories to help us explain how the risk for market assets can be appropriately measured in our life. Capital Asset Pricing Model ('CAPM') is one of the most influential and applicable models, which give good explanations and predictions of 'market price for risk'. This essay is going to look at what the CAPM really is, how it is derived and used, and will also see some limitations of applying it in practice. Assumptions First of all, we have to make some assumptions here, as the CAPM is developed in a hypothetical world, as written in the theory of business finance (Archer and Ambrosio, 1970): * Investors are risk-averse individuals who maximize the expected utility of their end-period wealth. * Investors are price takers and have homogeneous expectations about asset returns that have a joint normal distribution. * There exists
Assess the usefulness of the marginal productivity theory of wages in explaining how wages are determined.
Assess the usefulness of the marginal productivity theory of wages in explaining how wages are determined. Many theories have been advanced to explain the nature of wages. The first of them was the subsistence theory of wages, also called the "iron law of wages," of which David Ricardo was one of the main exponents. The theory maintains that wages cluster around the bare subsistence level of workers. A wage rate much above the subsistence level causes an increase in the number of workers; competition will then lead to a depression of wages back toward the cost of subsistence. Wages that are below subsistence reduce the size of the working population; in that case competition will raise wages, but only up to the subsistence level again. In the surplus-value theory as propounded by Karl Marx, the value produced by the worker in excess of what is paid in wages is called surplus value. The surplus value, exacted from the worker, constitutes the capitalist's profit. The wage-fund theory is that wages are advanced out of a fixed fund of capital, from which an excess withdrawal, either through legislation or through union pressure, will ultimately reduce the amount available for other workers. Any increase in wages would also have to be taken out of profits, and their reduction would cause a decline in savings, which provide the capital from which the wage fund is derived. The
Characteristics of Oligopolies
20th March 2002 Kingtoi Ho IB1 Characteristics of Oligopolies The definition of an oligopoly is a market structure under the control of a few firms. This structure allows for almost complete control over the market, making them price makers. As stated in Stanlake1, mostly mergers and amalgamation (combining of firms), bring about the oligopoly structure. The characteristics of an oligopoly are written below, also a large subject in Oligopolies is collusion. That is also discussed below. Characteristics given by Stanlake involve: the barriers to entry, the variation of the competing products, supernormal profits in the long-run, stickiness of price, domination of a few small firms at the top and most importantly the no-price competition undergone. Another found under the works of the Howard Community College2, are those involving the interdependency of the firms. Stanlake shows there are barriers to entry, disallowing incapable firms to enter the market. Incapability may reflect few companies having funds, legal permission or preference on part of the consumer. Most of the time oligopolies are the big firms and have more capital and use this in a way which satisfies the consumer. The smaller companies do not keep up with the larger ones and drop out of the market. The barrier to entry now comes when the firm wishing to participate cannot meet the larger firms' standards.
Should we join the Euro?
Should we join the Euro? There are many reasons for the UK joining the Euro. For example, if UK joins the Euro, there is no longer any need to take into account the cost of exchange rates when the pound fluctuates against the Euro. Firms do not have to face this type of uncertainty any longer. For example, the Swedish car company, Volvo, claim that there will be a cost of $36.9million if they do not join the Euro. It is highly likely to be a similar situation for a British firm. However, all the exchange rate costs that could be faced by a firm have not yet completely been eliminated. Although the pound would no longer have to fluctuate against the Euro as it will no longer exist, the Euro will still be on the global currency market, fluctuating against the Dollar and the Yen. The weaker the Euro may get, the worse the fluctuations will get. Nevertheless, if the final aim is for all countries to unite and form a global currency, then this is a step forward in that direction. Also, almost 50% of UK's trade is with Europe. Therefore it is good to at least eliminate this risk and lower a fraction of the costs incurred by the firm. If Britain joins the Euro, then there will be trade creation. This is when trade increases between the members of the EU, or any other trading bloc, due to economies of scale as the market has expanded. It cannot truly be a single market unless
Monetary policy of a globalised economy
PROJECT ASSIGNMENT ECONOMICS-1 MONETARY POLICY OF A GLOBALISED ECONOMY SUBMITTED BY: PRANEETH RAMANAVARAPU I.D.NO 1352 ST YEAR I TRIMISTER DATE OF SUBMISSION: 6TH SEPTEMBER, 2004 NATIONAL LAW SCHOOL OF INDIA UNIVERSITY Nagarbhavi, Bangalore TABLE OF CONTENTS INTRODUCTION..............................................................3 RESEARCH METHODOLOGY.............................................4 CHAPTER 1......................................................................5 CHAPTER 2......................................................................7 CHAPTER 3......................................................................13 CONCLUSION...................................................................19 BIBLIOGRAPHY................................................................20 INRODUCTION Macroeconomics is the study of behavior of the economy as a whole. It examines the forces that effect large number of firms, consumers, workers at the same time. It contrasts with microeconomics which studies individual prices, quantities and markets. Many economists consider the development of macroeconomics to be one of the major break through of twentieth-century economics. Through the choices of macroeconomic policy a nation can substantially manipulate the direction in which it economy is moving. This essentially means that by employing several
History of Economic Thought.
History of Economic Thought Carl Menger along with three other economists, Stanley Jevons, Leon Walras and Alfred Marshall, deserved to be considered as the pioneers of marginal utility theory that significantly changed the economic thought at the end of the 19th century (1870s) converting it from classical to neoclassical approach to economics. Their input into economics is very important since it dominates economics even now. Although Menger's vision on economics differs from the works of the other two economists, it did not prevent him to found Austrian school which was flourishing until 1930s and made the significant impact on the development of Economics. In this paper I will try to outline vision of mentioned economists and reveal the differences in their theories. According to the classical approach to economics, there were typically attributed differences in product prices to differences in the costs of producing those products. Products command higher prices because they are more costly to produce. However, in 1870s there was appeared a new line of explanation thanks to Mengor, Jevons and Walras. Although these economists had his own mode of presentation and expression, they were united in replacing this cost-of-production theory of pricing and resource allocation with a marginal utility theory. They explained prices in terms of the utility that consumers receive