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The world is increasingly becoming competitive in various aspects. Countries are now competing to attract investors from all over the world. It is the responsibility of the government to make the economy attractive. The government has a responsibility to ensure that it engages actively in various business activities. The government should always develop various regulations to guide business environment. Business cannot run in an environment that lacks clear laws and regulations that can help guide various players. The laws and regulations must exist in order to explain how business units relate among themselves, and how they relate with the government. This way, it is possible to know how each player is responsible to other players, and the possible consequences that a player may face by failing to take the responsibility.
Government intervention is also appropriate when market transactions affect the non-direct members negatively. For instance, this type of an externality occurs when telecommunication companies leave their boosters to emit the radioactive rays to the environment. The rays may cause contagious diseases to the area residents when they are exposed to them. The government puts measures that demand proper disposal of such wastes or appropriate compensation to victims owing to adverse effects of pollution. The government moves in to designate zones where such boosters and transformers are being built in addition to regulating advertisements that carry health warnings. The American government regulation agencies such as the Environment Protection Agency serve to protect the people who are directly affected by these by-products. The government also taxes such firms heavily so that the money goes to the provision of treatment of victims of pollution.
When firms operate as monopolies, they lack competition and therefore they dictate the prices charged on goods and services. This may affect consumers as producers increase the prices at will. The telecommunications companies may increase the call rates, charges on faxes, internet access fees, and charges on any other services they offer. The government will intervene in such markets as the only alternative available to consumers. The government intervenes in the market to offer essential services to its citizens. Some of these services require huge capital hence they are costly to the private investors. Investing in Telecommunication industry for instance is too costly to be left to the private sector. Communication is a very essential service as it empowers the citizenry. This is more sensitive and therefore he private investors may charge for such services vey exorbitantly. Therefore, the government has a constitutional right to control its production and dissemination. Sometimes, the private sector may offer poor services or even fail to agree on the payment modalities.
Communication services that fall in this category. Availability of knowledge to market players adds power to how they conduct businesses. However, acquisition of information is very costly, the government therefore intervenes to give information and foot the costs. This is important in the sense that imperfect information leads to market failure. Market structures in a way reward skills and efforts. The rewards of the market come with unattainable qualifications. In such circumstances, the poor do not benefit. Government intervention redistributes income to benefit all citizens. The market will for instance allocate eighty-five percent of the goods and services to fifteen percent of the population. To adjust this, the government uses the two systems of a means-tested transfer payments and a non-means payment transfer payment.
Government market intervention in the US
The first structure of the market was designed to be a free market economy, with the market forces controlling the economy. The government’s role was to reconcile the forces if disputes would arise among key players. Using its agencies, such as the Antitrust Agency, the government oversees the fulfillment of contractual agreements. The government implements policies that ensure the contracts between sellers and buyers, which are binding, are enforced. It collects taxes, which is a source of revenue. In a clearly defined term, it protects the property rights of all the market players. Some of the government functions in this area include issuing patents and trademarks to telecommunications companies for goods and services. People who come up with innovations such as the money transfer systems have to be given protection to make they get value from the knowledge, skills and for their efforts (Tregerthan, 2008).
Protecting citizens using its military personnel and fire fighting services are among the duties of the government in the market. The government has the duty of offering both demerit and merit goods. In this case, the government assumes that the public lacks the ability to make judgment on the consumption of certain goods. In supplying merit goods, the government believes that consumption of such goods is important, but the public underrates its benefits. Consumption is therefore encouraged. Examples of such goods have the cultural and recreational value, such as sports grounds. The demerit goods, on the other hand, are discouraged. The government feels that the public considers the side effects of such goods. The government at times takes extreme measures including prohibition. Illegal drugs are such goods. The government may also impose heavy taxes to discourage consumption on certain goods such as alcohol and cigarettes.
Challenges of Self-expansion via capital projects
The risks in businesses are real. Acknowledgement of risks helps an organization in building confidence. In this regard, the telecommunications organization is able to prepare solutions. The challenges come in three perspectives. The first challenge is personal. This involves the management and staff of the company Expansion comes with loss of time for their families. It also comes with stress due to commitment. Inclusion of friends may result to losing control over the business, which is another great challenge to the management. Three areas to be addressed in order to eliminate this challenge include drawing strategies, effectiveness of strategies, and the ease with which such strategies are implemented.
Business growth through self-expansion may be met with inadequate experience in terms of managing production of goods and services. This is especially if the management does not have the right skills. The British Telecommunications company for instance offers various services that need diverse skills of management. The subordinates may rebel towards to change because change may come with transfers and other adjustments. This would lead to underperformance leaving customers dissatisfied. If this happens, the company will experience financial strain. To avoid instability, financial loss, and ineffective management, critical evaluation of the strengths and weaknesses has to be done. Competitive risks arising from aggressive competitors, unexplored risks and walking an unfamiliar terrain is the last of the challenges (Samuelson, 2005). As much as it excites to develop new products for your existing markets or taking you products into new markets, caution is needed as the results my be disappointing. Staff training and outsourcing may be the best alternatives to curb uncertainties.
Convergence of interests
Self-expansion can lead to establishment of value among customers and the staff. It can also create a better brand for the firm, as well as supplying the markets with quality products. The ultimate prize is profits. Several factors from different interested parties have to be amalgamated to achieve this dream. The business has to cove out its niche in the market. Creating its stable share of the market would bring in regular customers. The company needs to create goodwill to achieve this strategy. This can be done through re-branding, development of new products to existing customers, acquiring new customers, and venturing into new markets. This will add value and quality to goods and services.
Growth poses new challenges to the staff. Most skilled workers feel great to face the challenges. Retaining the employees shows commitment. In fact, economic success demands commitment and loyalty. This is applies well when employees are young. The firm ought to be committed in case it intends to get a big client. This would boost the financial strength of the firm along with stamping authority in the market share. To reach maximum profits, the company must seek to attain the economies of scale. The overall costs will be reduced, owing to the advantages of economies of scale. Marketing costs, insurance, professional fees, and bank transactions would all be cut down (Mankiw, 2008).
Since the business is involved in self-expansion, growth that aims at creating a dynasty would be important. A large business builds confidence among the potential lenders and therefore accessing loans would be easier. The challenge would be handling the fear of having higher risks. Investors would prefer business with less risky stocks. Therefore, business units should be maintained at levels that would attract investors.
Mankiw, G. (2008). Principles of Microeconomics. New York: Cengage Learning Samuelson, D. (2005). Economics. London: McGraw Hill
Tregerthan, T (2008). Principles of Microeconomics, flat world. London: knowledge publishers.