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Government Intervention :classical_building: - Coggle Diagram
Government Intervention :classical_building:
Promoting a Stable Market :department_store:
Why are monopolies bad
They cut out competition.
If a company has a monopoly they can control the market and create any type of price they want.
Less incentive(Motivation) to create a better quality product as there are no other competitors to compete with the company.
Example of a monopoly
A company called De Beers Consolidated mines took control of a huge part of the market in the diamond industry. Once they had control they could do anything to the price as nobody else could overtake them. They created artificial scarcity in the diamond market.
What is a monopoly?
A monopoly is when a company or group has complete control over the supply of a product or service. Allowing them to control prices and create artificial scarcity.
Ensuring the Safety of the Consumer :construction_worker:
Role of Health Canada
Companies who produce goods for people to eat must follow Health Canada's safety regulations.
Warning Labels
Nutritional Labels on food products
Product Recalls
Even after all of these tests and regulations, sometimes products are able to be sold to consumers without being safe.
This leads to Product Recalls. The Government is able to force companies to recall items, It ensures the consumers are safe and are not handling defective goods.
Role of CSA
The CSA or Canadian Standards Association makes sure that products sold by producers are safe for consumers to use.
They make sure of this by putting products under various test to ensure product safety
Environmental Protection :deciduous_tree:
Why it is important
It informs Canadians about protecting and conserving our natural heritage, and to make sure they have a clean, safe and maintained environment for the present and future generations.
Example of environmental regulation on businesses
Companies who log trees usually harvest trees from public land. After they clear the trees off the land they have to pay to have the land re-planted with trees to ensure our forests are maintained.
Labor Laws :warning:
Describe what they are
Labour laws are laws in Canada that protect employers and workers rights.
Includes things like: Conducting workplace inspections, Investigation of workplace accidents.
Limits on minimum wage
Required breaks and resting
Age restrictions (Youth Labour Laws)
Weekly hour limits
Works have the right to refuse dangerous work
Government can enforce health and safety standards in workplaces
Why are they important
So that workers are comfortable and not working in a place where they are treated unfairly.
Workers are very important in Canada and they need to be well accounted for so that we don't lose workers.
Crown Corporations :crown:
What are they?
Crown corporations are fully owned federal or provincial organizations that are structured like private or independent businesses.
Why do they exist?
Crown Corporations are usually created to fulfil a need that would not make any profit for a private company.
Some crown corporations exist to promote Canadian culture and identity.
Some examples
CBC
Canada Post
VIA Rail
Bank of Canada
Prevent Price Fixing :convenience_store:
What is price fixing?
When a company only sells a certain item/service/product at a fixed price despite the market via an agreement with competing producers.
Canadian Bread Industry: Bread prices where fixed and not influenced by the market.
Used to increase income within producers.
What act protects consumers from companies price-fixing?
The Government uses the Competition Act to combat price Fixing in Canada.
The Canadian Government wants to make sure Businesses don't fix their prices to inflate profits.
Drawbacks of government involvement in the economy :red_cross:
Government corruption and collusion
Governments have a lot of power and have knowledge of information outside of the public. It is against the law for government officials to use private information to gain profit, this is called insider-trading.
Example
Recently a group of US senators sold an important part of their stock portfolio after a private meeting about the damage COVID-19 would do to the stock market.
Waste and inefficiencies
Government organizations sometimes have a reputation for being inefficient and wasteful. Government employees are often well paid and have good job security. This can lead some to become lazy and inefficient at their job. That is our tax dollars paying their huge salary. Private companies run on profit so finding efficiencies makes you more competitive and profitable. That is why some people think all crown corporations should be privatized.