Liberalisation: European Union and Eu Competition Commissions Essay

Submitted By Hamzafarooq123
Words: 666
Pages: 3

Outline the advantages of liberalisation as expressed in the EU competition commissions policy by analysis of:
Benefits to customers
Employment levels
Business efficiency
Potential economic development and gdp growth (40%)
Discuss advantages of liberisation etc(20)
Compare experiences of liberisation within the EU member states to other world wide experiences. (10%)
Grammar research (30%)

To understand the EU competition policy, you have to understand in economic terms what competition is. Competition is described in economic theory in terms of market structures. Market structures are defined by the competition amongst suppliers. One theoretical market structure is, Perfect Competition. A market structure with perfect competition has to have a few standards. Firstly all firms sell a similar product, and due to their relatively low market share, all firms are price takers- cannot control the market price. Moreover freedom of entry and exit are widespread in this market. Darci,M (2012). Another theoretical market structure is Monopoly, this is a market with only one seller and no close substitutes for that seller’s product. Beggs (2013) also explains that the single seller in this market can also be referred to as a monopolist. The main reason why monopoly’s arise could be due to ‘barriers of entry’, this could be due to one company having ownership over a key resource. Another reason could be the government giving permission to a private or Government-owned business to have full control in a particular market. Oligopoly, is a real word market structure categorised by a few large firms with high market share.

The EU competition policy is

Liberalisation is the term used to describe when certain markets are opened up to competition, in particular services like transport, telecommunication, postal services and energy. The European commission regulates and instigates new policy. (reference )

The advantages of liberalisation as expressed in EU competition commissions policy can be explained in four sections.

The first is the benefits to consumers, the EU competition commissions policy explains that liberalisation has many positive effects on consumers. An open market means more competition, this means that’s prices will have to be more competitive in order for businesses to stay competitive. This ultimately means that the consumer would pay lower prices. Further more the EU commissions policy states that these services become more ‘consumer friendly’, this could be due to the competitors in the liberalised service trying to retain customers, by providing a better service. The commissions policy also explains that the first two markets opened up to competition (Air transport and Telecommunication) had positive effects on customers. The average prices decreased substantially. ( reference)
Employment levels

The transport sector employs 5.1% of the EU and is responsible for around 3.7% of European…