BA 390 Week 9
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This 3 page Class Notes was uploaded by Samantha Tucker on Monday March 7, 2016. The Class Notes belongs to BA 390 at Oregon State University taught by Toombs in Winter 2016. Since its upload, it has received 35 views. For similar materials see Marketing in Business at Oregon State University.
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Date Created: 03/07/16
BA 390 Week 9 Session 1 Regulation in a Free Market Regulation Discuss the government’s role in its relationship with business Explore the interactions among business, government, and the public Examine government’s non-regulatory influences List major reasons for regulation, the types, and issues arising out of regulation Consider regulation versus deregulation Public goods Goods/Services society pays for “value of that good can’t discriminate” o Standing army o Police force/fire department o Roads o Bicycle lanes History of regulation Government’s role in influencing business o Prescribes the rules of the game for business o Purchases business’ products and services o Uses it contracting/coercive power to get business to do things it wants o Is a major promoter and subsidizer of business o Is the owner of vast quantities of productive equipment and wealth o Is an architect of economic growth Highways built by Federal Highway Act 1956 o Is a financier Ex: Student loans; GI bill o Is the protector of various interests in society against business exploitation Ex: FDA, OSHA, Department of agriculture o Directly manages large areas of private business Affordable care act Social security o Is the repository of the social conscience and redistributes resources to meet social objectives. Coercive nature of the government o Pay stub: withholdings; taxes automatically taken out o Sales tax Roles of Government and Business What should be the respective roles of business and government in our socioeconomic system? Given all of the tasks that must be accomplished to make our society work, which of these tasks should be handled by the government and which should be handled by business? How much autonomy are we willing to allow business? o What exactly are business intentions? They can’t cheat Clash of ethical systems o Business beliefs: risk Maximizes concession to self-interest Minimizes the load of obligations society imposes on the individual (Personal freedom) Emphasizes inequalities of individuals o Government beliefs: fairness Subordinated individual goals and self-interest to group goals and group interests Maximized obligations assumed by the individual and discouraging self-interest Emphasized equality of individuals Social, technological, and value change o National society o Communal society o Entitlements o Quality of life Government’s Nonregulatory Influence on business Two major nonregulatory issues o Industrial policy Pros: Decline of US competitiveness Use by other nations Ad hoc system Cons Reduces market efficiency Promotes political decisions Foreign success variable National attempts uncoordinated and irrational o Privatization Producing versus providing a service Privatization debate Federalization of certain functions o Airport security Government’s Regulatory influence on business Federal regulatory agency o Has decision-making authority o Establishes standards or guidelines conferring benefits and imposing restrictions on business conduct o Operates principally in the sphere of domestic business activity o Has its head/members appointed by the president o Has its legal procedures generally governed by the administrative procedures act Reasons for Regulation o Controls natural monopolies o Controls negative externalities o Achieves social goals o Other reasons Controls excess profits Controls excessive competition Types of regulation o Economic regulation Interstate Commerce Commission (ICC) Civil Aeronautics Board (CAB) Federal Communications Commission (FCC) o Social regulation Environmental protection agency (EPA) Occupational safety and health administration (OSHA) Equal Employment Opportunity Commission (EEOC) Benefits of Regulation o Fair treatment of employees o Safer working conditions o Safer products o Cleaner air and water Costs of regulation o Direct costs o Indirect costs o Induced costs Effects Reduced innovation Reduced investment in plant and equipment Increased pressure on small business Deregulation Purpose: intended to increase competition with the expected benefits of greater efficiency, lower prices, and enhanced innovation Dilemma: must enhance competition without sacrificing applicable social regulations (i.e., health and safety requirements).
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