Control of monopolies and restrictive trade practices, economics, Microeconomics

Control of Monopolies and Restrictive Trade Practices
Monopoly hampers economic growth by lowering output and increasing prices and has an anti-social impact. In India, the Monopolies and Restrictive Trade Practices Act was enacted in 1969 to limit the growth and abuse of monopoly powers. Concentration of economic power according to the MRTP Act refers to either:
(a) the market power,
(b) the power over disposal of scarce economic resources of the community, or
(c) the power to influence political decisions.

The economic power is detrimental in economic growth as it is:
(a) power over existing competitors in the market,
(b) power over potential competitors in the market, and
(c) power over consumers who comprise the market.
The power over disposal of scarce economic resources of the community would, to a certain extent, indirectly flow from the first category. As a result of market power, the businessman can draw resources of the community that have alternative uses. Concentration of economic power refers to:
- the control over material resources of the community, and
- the possession of certain market power with dominance.
The various measures adopted by the Government to control monopoly and economic concentration are contained in the Industrial Licensing Policy and Fiscal Policy of the Government. The measures adopted by the government are listed below:
(a) Prevention of monopoly houses from expanding further from their areas of operation and building up their capital and assets.
(b) Exclusion of monopolies and large industrial houses from areas reserved for the public sector and small scale industries.
(c) Promotion and development of the joint sector in which State participation would work as a check on the monopolistic and restrictive practices.
(d) Expansion of the public sector so as to cover the large investment areas reducing the need and scope for large industrial houses in the private sector.
(e) Reducing the value of assets so that, by definition, any industrial concern having assets in excess of Rs 20 crores would be considered as a large industrial house and be subject to MRTP Act.
(f) Encouraging the competent small and medium sector in building up their competitive strength in the areas of large industrial concerns.
Posted Date: 2/10/2012 11:59:09 PM | Location : United States







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