Essay about Mergers in the World Economy

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Mergers in the World Economy


. "Monopoly is a great enemy to good management which can never be universally established but in consequence of that free and universal competition which forces every body to have recourse to it for the sake of self-defense" (Smith, 1776: 63).

Adam Smith found that monopolies were a negative aspect for an economy therefore supporting competition among firms in order to protect one’s firm.

Competition policy affects the nature of firms and policy makers in today’s global economy. Competition policy effects the world economy in many ways and with its increase in importance there must be an international agreement on competition policy. Adam Smith highly regarded competition policy as a means to enhance
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Without any policies firms could try and monopolize the industry and there would not be restrictions for new producers into the market.

Competition policy effects many parts of the global economy. It impacts actions such as mergers, trade policies, acquisitions and strategic business alliances. Smith examines how trade is related to competition policy when trade is privileged for a few. "Privilege of an incorporated trade restrains the competition in the town where it is established to those who are free of the trade" (Smith, 1776: 135). Some trade policies could affect the process of competition. Today within the international economy trade policy has common characteristics with competition policy in such instances as non-border trade barriers. Although using competition policy as an actual trade policy mechanism in order to increase market access can raise problems. Tharakan and Lloyd point out the fact that using competition policy directly for market access is not a desirable action to take.

Competition is implied from the freedom of economic order and the freedom to compete. Fortman claims that "the exercise of private economic power is controlled by the opportunities enjoyed by other economic subjects to make use of this freedom of enterprise" (Fortman, 1966: 2). Therefore when competition is restricted free enterprise activity is then restricted.

We are living in a world of…