Competition+Policy+-+Rhys+De+Wilde


 * COMPETITION POLICY**

__**How does this microeconomic reform work?**__ As stated in the Competition Policy Reform Act; instituted by the Australian government in 1995, //' ////The object of this Act is to enhance the welfare of Australians through the promotion of competition and fair trading and ////provision for consumer protection' .// The basic idea of this policy is to allow the consumer to pay the appropriate amount for the value of the good. The government is able to achieve this by lowering the cost of production, therefore allowing the firms to provide savings and decreased prices for the consumer. The aim main aim of competition policy is **promote competition; make markets work better**. This act also promotes;
 * Wider consumer choice in markets for goods and services.
 * Expanded Aggregate Supply facilitates growth in the Aggregate demand without causing inflation
 * Effective price competition between suppliers.
 * Investigation of allegations of anti-competitive behaviour within markets which might have a negative effect on consumer welfare.



__**How does this reform help boost productivity at the workplace level? **__ This reform is extremely effective to boost productivity at the workplace. Firstly, it increases productive capacity whilst lowering production costs. This will allow Aggregate Supply to increase rapidly, which will therefore lead to an increase of Aggregate Demand as the level of prices among these goods will decrease. This will also allow a large range of products (excluding government controlled industry) to reap the benefits of this policy which will then be passed on to the consumer through lower prices. Finally technological innovation will allow firms promote gains in dynamic efficiency. The increased levels of competition will force firms to adapt their technology to the surplus of Aggregate Supply and therefore cause them to work 'harder, faster and stronger' than their competitors.



__**How does this boost help contain inflationary pressures?**__ The Competition Policy helps to contain inflationary pressures through the increase in the supply; and hence the decreased prices. An example of this is that of Qantas. Once dominating the Australian airfields as a monopoly, it was later privatized and it offered increased competition. This is therefore beneficial for the market, as it provides an increase in Aggregate Supply and the increased efficiency will allow the level of inflationary pressures to be contained. This will therefore cause the cost of Production to lower for all kinds of firms, as many firms rely on Qantas and other airlines to transport workers and supplies nationally and overseas. This contains the inflationary pressures as it decreases the Aggregate Demand and increases the Aggregate Supply of a product or service.



Yes. For example, the government will lose support of all big and small business owners in Australia. This is because the increased competition will forbid the companies from earning any substantial profit in the long term. This also means that there will be a drastic decrease in Aggregate Demand for goods and will cause there to be overstocking by companies due to this decreased demand. Therefore, this will cause businesses to lose faith in the Policy and cause them to look for alternate options.
 * __Are there any negatives associated with this reform?__**



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