The Between Germany And France

840 WordsJan 23, 20164 Pages
Developed economies, such as the EU countries and the US support the economic market economy or “laissez-faire”, where there is a free economic system in which the government does not intervene in the functioning of the economy (Bamford and Grant, 2011, p.26). Yet, we see that these countries actually intervene and regulate many aspects of the economy not only in the public sector but also on the private sector (in practice using a mixed economy approach). This is done to ensure (1) the establishment of perfect markets and a balanced division of power between consumers and suppliers; and (2) growth of their economies. In this context, as the largest trading and economic area in the World, the EU has established a common competition policy for all its member states. Dating back to 1960’s, when it was first used to regulate for price differences between Germany and France (European Commission, 2012), it has evolved to achieve an all-encompassing homogenous competition policy among EU nations that strengths the Single Market. One of the reasons governments intervene in the economy is to guarantee that markets get as close as possible to perfect competition, which is a market structure characterized, among other things, by many rival suppliers (firms) that are price takers (Perloff, 2012, p.227). This competition makes possible the offering of quality products at the best prices. Consumers will always choose those suppliers that offer the best quality/price ratio, so that
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