Intro to Business|
Should government action to deal with deceptive business practices increase, or should we count on business to regulate itself to prevent deceptive business practices? Why is the government intervention or business self-policing better? Which solution is better for society and business in the long run? Why?| 11/19/2012
Intro to Business
By nature businesses are driven by the need for success as well as profit. This very need for success fuels a business’s approach to handling regulations. By doing so, this will increase regulations on businesses, whether deceptive or not. In the end this will actually benefit a business specifically: Big Business. It takes a substantial amount of money for a government to set up regulations, so why would big business favor it; because it is costly.
Costly regulations add to the cost of doing business, corporate inflation, this eventually and slowly will eliminate smaller businesses because the cost of running a business becomes too high for them to stand a chance against bigger business, reducing the number of competitors. Thinning out the competition will allow the surviving firms to charge higher prices to customers and also, demand lower prices from suppliers which will conclude with the increase of power among big businesses. Self-Policing and Government Intervention:
Self-policing has become more evident in today’s corporations. Self-policing has emerged and become more effective when the value of particular franchises of individual businesses in a community stand to receive a considerable boost from cooperation to reduce the costs to deal with limited trust.
The government’s ability to tax, provide subsidies, etc. can be used to strengthen a business firm. “According to Stigler, the ability of the state to use its coercive powers to provide subsidies, or to control entry, or to fix prices, can be used to advantage by business firms.