Table of contents
Table of contents 1
Question 1: Anti-competitive behaviour in a named sector of the South African Economy. 1
Question 2: New macro economic policy orientation for South Africa 9
Question 3: Conditions available to attain short-term and long-term profit maximisation. 14
List of References i
Question 1: Evaluate the nature, extent and consequences (and/or potential consequences) of anti-competitive behaviour in a named sector of the South African Economy.
Anti-competitive practices are business practices that prevent and/or reduce competition in a market and include:
• Dumping, where products are sold into a market at a low price which renders competition impossible, in order to wipe out competitors
• Barriers to entry (to an industry) designed to avoid the competition that new entrants would bring
• Price fixing, where companies collude to set prices, effectively dismantling the free market
• Resale price maintenance, where resellers are not allowed to set prices independently
• Absorption of a competitor or competing technology, where the powerful firm effectively co-opts or swallows it's competitor rather than see it either compete directly or be absorbed by another firm
Price fixing is an agreement between business competitors to sell the same product or service at the same price. In general, it is an agreement intended to ultimately push the price of a product as high as possible, leading to profits for all the sellers.
Price fixing requires a conspiracy between two or more sellers; the purpose is to coordinate pricing for mutual benefit at the expense of buyers. Sellers might agree to sell at a common target price; set a common "minimum" price; buy the product from a supplier at a specified "maximum" price; adhere to a price book or list price; engage in cooperative price advertising; standardize financial credit terms offered to purchasers; establish uniform costs...