Question

1.Is Small Beautiful?

Consider the arguments about big business in Chris Tilly, “Is Small Beautiful “(article 5.1 in Real World Micro), Edward Herman’s “Brief History of Mergers and Antitrust Policy” (article 5.2), and Rob Larson, “Not Too Big Enough” (5.5). Should we have a more aggressive policy to break up large businesses and promote competition?   State their arguments and give reasons why you agree or disagree.  

Answer 1

solution-

In order to develop competition and protect the consumers from predatory practices by the business organsiations, US government formed Anti Trust law which is also known as competition laws so that fair competition can be boosted by preventing the mergers.

The competition law which try to ensure the market competition by demoralising the anti-competitive practices through public and private enforcement is the foundation of the arguments by Chris Tilly, Rob Larson and Edward Herman about big business

In the opinions of Edward Herman, the formation of some particular types of monopolies can be restricted with the help of competition law by controlling the mergers and takeovers. It is a well known fact that the economic growth can be boosted by motivating the competition in the economy as the economy which has many small business organisation has greater growth rate than the economy having few large business firms. This is due to the fact that innovation is increased as more firms compete with each other for achieving greater level of customer satisfaction and to create customer loyalty.

Let us consider the example of Korea and Japan where the high growth rate is resulted due to higher level of competition and this is also a factor behind the international integration in Vietnam

Avoiding the development of any form of monopoly is the main reason for the implementation of competition law. Through monopolies, the business can control the entire market. The government can ensure that the customers are facilitated with the high quality products and innovative services at reasonable prices by suppressing monopolies.