Competition+in+markets

Competition and the market mechanism

The market mechanism refers to the way the forces of demand and supply allocate scarce resources in an economy. Relative prices give signals to producers and consumers that will influence their decision making. An increase in the relative price of a good or service may indicate that there has been a change in consumer tastes towards the product (it may have become more fashionable). If the product is now more popular then the higher prices in the markets may encourage more suppliers to produce that good or service as it is now more profitable to do so and relatively less profitable to produce what they were producing before.

Here are some interesting applications of the market mechanism in action.


 * Discussion forum topic 1 : internet retailing **


 * Background information **

In January 2011, a group of major Australian retailers started an advertising campaign to educate the public and influence the government with respect to online shopping. They argued that international online retailers were getting an unfair advantage because consumers purchasing from their site did not have to pay the GST on any purchases that were less than $1,000. The retailers argued that this would destroy jobs in Australia and reduce the ability of governments to provide essential services to Australians. Some commentators have argued that the big retailers are crying foul when they have benefited from a lack of competition in many industries in the past. They are worried about their monopoly profits disappearing. Here are some useful links to help you formulate your opinion on internet retailing:

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In the news


 * [|Big Retail to expand tax crusade] **


 * [|It's the workers who have most to lose, says Solomon Lew] **


 * [|Online shoppers should pay more for the good of Australia - Gerry Harvey] **

[|Gerry Harvery on ACA]

Hi Mr. MacGregor found a link to a good article on Online Shopping: []

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