Page 81 - Bus101FlipBook

CH 5] Business 101 5-23

Illustration 5.7 The Government Agency and the area of business it affects.

Government Agency Responsibility

Federal Trade Commission (FTC) Antitrust, deceptive advertising
Interstate Commerce Commission (ICC) Interstate rail, bus, truck, and water carriers
Environmental Protection Agency (EPA) Pollution standards and control
Food and Drug Administration (FDA) Consumer protection from hazardous products
Equal Employment Discrimination in employment practices
Opportunity Commission (EEOC)
National Highway Traffic Vehicle safety
Safety Administration (NHTSA)
Occupational Safety and Safety in the workplace
Health Administration (OSHA)
Federal Communications Radio, television, and telephone communications
Commission (FCC)
Securities and Exchange Stocks and bonds
Commission (SEC)
Consumer Product Safety Consumer safety
Commission (CPSC)
Federal Aviation Administration (FAA) Airline industry
Federal Power Commission (FPC) Rate and sales of natural gas
Nuclear Regulatory Commission (NRC) Nuclear power

Regulations Affect Competition
Strong and vibrant competition is the cornerstone for a free market system to function 5
in the private enterprise economy. The laissez-faire ("hands off") doctrine in effect during
the first century of the United States promoted the growth of the nation economically,
geographically, and politically.
As the United States aged, economic power began an over-concentration in some basic
industries, such that monopolies would develop. Corporate mergers would concentrate
economic power to an even greater extent, such that competition would be stifled. Do
understand, business is about competition, capturing market share and holding it. To
engage in competition, the business owner does want to beat out that other competitive
businesses wanting to capture their customers. In the automobile industry, which is an
oligopoly, the market is divided up among the loyalists of General Motors, Ford, and
Chrysler. Each of these companies have their symbols to attract buyers and differentiate
themselves from their competitors. Chevrolet’s “An American Revolution” and “Mr.
Goodwrench” represents General Motors. Ford uses “Job One” and Chrysler emphasizes
“Mopower.” Each to develop a loyal customer base.

People recognize that competition allows new products to be developed, increased
efficiency and productivity increases the supply of goods to be marketed and overall retail
prices for goods and services drop. Congress, in hearing these sound economic arguments,
develops legislation with the intent of assuring the benefits of competition in a free market.
Sad to say though, good intentions do go astray, and some regulations actually harm
competition because of their implementation costs.
Approaches to Regulating Competition. When congress and state legislatures began
writing regulations for competition and other commercial activity in the late 1880s, their
intent was to encourage competition among business firms. Many of the laws written were
to outlaw monopolies (or trusts), price fixing and other business practices that restrain trade regulated industry
(cripple competition), and intended to ensure that consumers have a choice in a free Industry in which
market. Congressional legislation took two directions: statutes to assure competition and competition is either limited
enactments that would regulate an industry. or eliminated and close
government control
In a regulated industry, competition is either limited or eliminated, and close substitutes for the market
government scrutiny and control is used to replace competition. Examples of regulated controls of free competition.

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