1 Name: Professor: Course: Date: Anti-Competitive Conduct Is Bad For Market Economy, Competition and Consumers Introduction In the

contemporary society, most economic markets are encouraged to promote a competitive environment. This is because competition has been cited to facilitate numerous benefits for the market and its features holistically. The definition for competition as per the discipline of economics is the rivalry existent between sellers in the market when trying to achieve their business goals. These goals may include increasing their profits, sales, market share and status among others. This is achieved through the actions of the sellers in varying the marketing mix elements (Mankiw 2011, p.36). These elements include the price, distribution, promotion and the product. The competitors will strive to enhance their competitive edge, through ensuring that their business terms are more attractive than the rest of the market, hence have a competitive advantage. There are numerous forms of competition in the economic scenario, and these variations are based on the characteristics exhibited by the competition and the market. These include perfect competition and imperfect competition. The distinction between these forms of competition is that, in perfect competition, there are enough participants translating into market power, in the sense that, they can influence the pricing of products, which are homogenous. Therefore, naturally in this form of the market there is an opportunity for the players in the economy (Mankiw 2011, p.39). In an imperfect market, however, the conditions of the perfects competition are not fulfilled hence it is characterized by monopolies and oligopolies. Monopolies are incidences whereby is a sole seller of certain goods while oligopolies involve few sellers for the goods

2 present in the market. It is apparent that a perfect competition is most beneficial for the market. Anti-competitive behaviour is detrimental to the realization of such markets, and the result is an imperfect competition. This means that this behaviour has a negative impact on the market economy, competition and the consumers. There are numerous advantages, which are resultant from the situation of a perfect competition. This is because competition is seen to promote beneficial outcomes for the whole economy. This is due to the actuality that it promotes the sovereignty of consumers (Mankiw 2011, p.156). This is because the consumers in the market will be empowered, and they will have autonomy in choosing their preferred goods and prices present in the market. This is mainly because of the choices, which are existent in a competitive market. The competitors also benefits since they will be facilitated to compete effectively in the market due to the characteristics present in a competitive market. There are three levels of economic competition, which can be experienced in a market. The most constricted level is direct competition, whereby, there is direct competition between the products, which perform a similar function (Mceachern 2012, p.540). The next form includes substitute competition whereby a product can be substituted with another serving a similar purpose. For instance, margarine can be replaced with butter. The third level involves the budget competitions. This includes the amount and the areas families are willing to spend. These levels of competition are evident in a competitive market. Competition is not confined to be present between companies. This is because there are instances where there is internal competition. This means that, in a competitive market, competition is experienced in all sectors of the economy. It is apparent that competition is beneficial in enhancing the operations of the players in the economy. For instance, competition encourages innovation and performance. This benefits the market holistically. It is necessary to explore the benefits of competition to the various players in the market in

3 order to comprehend the scope of anti-competitive behaviour. Consumers are singled out to benefit most from the occurrence of competitive markets. This is because they will be exposed to numerous product choices (Mceachern 2012, p.539). They will be able to exercise autonomy when making choices in the market. They will also enjoy low prices, which is a direct consequence of competition. The competing companies will have to make their products attractive hence; prices will have to be lowered in order to attract the consumer base. Consumers will also benefit from products, which are of high quality. This is because competition will prompt the competitors to produce goods, which are superior to the competition. If the market enjoys competition, the consumers will be able to access the aforementioned advantages. Companies are also beneficiaries of a competitive market. This is because the companies will become innovative in order to remain competitive in the market. This will result in a wide product range hence an increase in the market segment. Competition will also make it conceivable for new entrants to exploit the opportunities present in the market (Mceachern 2012, p.541). The economy is also a beneficiary of competition in various ways. Competition will promote market activity hence result on positive outcomes for the economy. Competition will also encourage economic growth since innovation and new entrants encourage economic development. Governments will also experience the advantages of competition. This is through increased revenue collection and taxation resultant from competition. Employment rates will also soar hence social problems synonymous with unemployment will be reduced. The government will also avail better services due to the increased resources resultant from competition (Mceachern 2012, p.560). It is evident that competition benefits the various sector of the economy and should be encouraged in all markets.

4 As mentioned before, anti-competitive behaviour impedes the benefits of a market. Some of the anti-competitive behaviour includes practices, which are with the intention of distorting free competition in the market unfairly. Examples of these practices include the following. Some companies use unethical means to force get rid of the competition. This involves dumping of goods in the market through their sale for prices, which result to losses. The free is later raised resulting in the company realizing super profits (Arnold 2008, p.396). Another anti-competitive behaviour is exclusive dealings, in that the lower chains of distribution are contracted to deal with one supplier. Companies might also collude to fix the prices in the market hence stifling competition. The companies might also agree not to conduct business with a singled out vendor. Companies might also divide the market hence reduce competition in their territories. In cases where there is a monopoly, the company might limit the price to discourage new entrants. Products, in some instances, are also tied requiring them to be purchased together. This reduces completion from the producers of similar goods. The aforementioned practices result in impediments, in the market, from being competitive. The existent players employ unethical tactics to dissuade new entrants into the market or cripple the operations and market position of existent companies in order to monopolize the benefits of the market (Arnold 2008, p.396). These practices hamper competition and result in detrimental effects for various players in the market including the consumers and the market economy. It is apparent that anti-competitive behaviour has an adverse effect on competition. This is apparent from the intentions and outcomes of the behaviours. Most of the actions, which are anti-competitive, have the objective of locking out new entrants who might bring competition into the market (Arnold 2008, p.461). Anti-competitive behaviour, locks out potential entrants hence impeded the market's growth to become a competition. Some anticompetitive behaviour intends to force out existing competition hence reducing a market to

5 an imperfect competition. This means that any form of anti-competitive behaviour has a detrimental effect for competition in the market. As aforementioned, consumers appear to be the most beneficial player when there is competition in a market. This actuality is reverses the benefits afforded for the customer through competition hence resulting in negative outcomes. Firstly, anti-competitive behaviour will result in the customers influence, in the market, to be diminished. This is because the anti-competitive approaches in the market will result in the shift of market power from consumers to companies in the market. The reason for this actuality is that the consumers choices will be limited hence; they will have to conform to what is available in the market. This makes the companies have the power to influence the market hence there will be a disregard for the consumers need since the companies will prioritize their interests. Customers will be subjected to high pricing since the companies will have the ability to control this market. Customers will be forced to accept these prices since they will have limited in the market. Product quality will also be influenced negatively since the consumers will have to purchase the available products in the market regardless of their quality. Companies will compromise the quality of products to maximize their profits hence the consumer will lose out in the process. The consumers will also be subjected to limited product choices; hence will have to rely on the existent suppliers, even if they do not satisfy the consumers needs fully (Arnold 2008, p.472). It is evident that the consumer will be a substantial loser if the market is subjected to anti-competitive behaviour. The economy is also impacted negatively be anti-competitive behaviour. As aforementioned, competition brings about numerous advantages for the economy. This is attributed to benefits, which are resultant of competition. This include increase in revenue, employment levels and industries factors which are essential indicators of economic growth. This means that competition directly influences economic growth. If a market experiences

6 anti-competitive behaviours, there will, be detrimental effects for the economy. This is because; lack of competition in the market will result in a reduction in the revenue, which is generated in the market. This is resultant from the market leaders regulating the number of players in the market. Anti-competitive behaviour will also result in the stagnation of job creation, in the market, or reduce the number of employment opportunities. This will be detrimental to the economy since it will be impacted negatively. Economic growth will also be stunted, since there will limited entrants into the market hence; the economy will not experience growth due to the creation of new industries. Anti-competitive behaviours clearly has a negative impact in the economy. Conclusion Competitive markets are favoured in the contemporary world. This is because of their numerous advantages to the player in the economy including the consumers and producers. Despite this actuality, there are instances where companies employ anti-competitive behaviour in order to diminish market competition. This will result in detrimental outcomes for the economy.

7 List of References Arnold, R. A. (2008). Economics. Mason, OH, USA, Thomson South-Western. Mankiw, N. G. (2011). Principles of economics. Mason, Ohio, Thomson South-Western Mceachern, W. A. (2012). Economics: a contemporary introduction. Mason, OH, SouthWestern Cengage Learning.