Mergers in the World Economy Essay -- Economics Wealth Papers

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 economic performance. Mergers can provide positive aspects for an economy and competition policy but also provide problems. The merger of aircraft manufacturers shows how mergers directly affect society today. Competition within economies is the act of competing in the international economy. Competition policy is necessary to regulate competition between firms. It serves as a barrier for misconduct of firms while encompassing antimonopoly policies which act as guideline against boundaries or barriers. "Competition policy is understood as facilitating corporate takeovers to allow more efficient managers to control productive assets" (Peritz, 1996: 282) The main goal for competition policy is to support effectiveness of the economy as a whole. Smith points out how competition will only benefit both consumers and producers in the end rather than have a monopoly. "It can never hurt either the consumer or the producer on the contrary it must tend to make the retailers both sell cheaper and bu... ...ade Rules in the Making. Washington DC: The Brookings Institute Press. Jacquemin, Lloyd, Tharakan and Waelbroeck. 1998. "Competition Policy in an International Setting: The Way Ahead." The World Economy Volume 21 Number 8, pages 1179-1183. Kim, E. Han., Singal, Vijay. 1993. "Mergers and Market Power: Evidence from the Airline Industry." The American Economic Review Volume 83 Number 3, pages 549-568. Ott, James. 1986. "Airline Mergers Will Intensify Competition for Aircraft Orders." Aviation Week and Space Technology, pages 32-34. Peritz, Rudolph. 1996. Competition Policy in America: 1888-1992. England: Oxford University Press. Smith, Adam. 1776. The Wealth of Nations. England: Oxford University Press. Tharakan and Lloyd. 1998."Competition Policy in a Changing International Economic Enviroment." The World Economy Volume 21 Number 8, pages 997-1002.