In most parts of the developed countries the economy is regulated through liberal systems. A liberal system means that there exists open markets and competition over these markets. States and governments are not the leaders of these markets. They are only the institutions which have created rules to make the system efficient. Institutions are in charge of the regulation of the market, that is to say that governments are just the referees of the market. They have to control the good application of the rules and may be the drivers of growth when the economy is declining. For example, in France, the government was active during the 90's, even more so when Edouard Balladur was Prime Minister. Effectively, during the year 1993, government was present in French economy to increase French development and French growth. Balladur tried to boost the automobile industry which had suffered a severe economic crisis. His government offered to French inhabitants various incentives to renew their cars.
[...] This project is about business law, about state importance in economy and especially rules about trusts and monopolistic situations. So, we are going to make a demonstration composed of three parts to analyze the subject. In the first part, we'll develop what is exactly an open market, to understand what are its strengths and its weaknesses in ours western model economies (when we speak of a western model, we speak about all the liberal models, including Japan for example). This part will deal with offer and demand, with competition, and with privatization, which is a French current topic. [...]
[...] We can speak of a monopoly situation when we notice one of the four following aspects in the market. These aspects can be aggregated in a unique case. The four characteristics of a monopoly situation are to find single sellers, to find a market where there are no close substitutes, when there is a unique firm who fix the price (unique price maker), and when a market is considered to be blocked by a firm (blocked entry): Single Sellers A pure monopoly is an industry in which a single firm is the unique producer of a good or the unique provider of a service. [...]
[...] On the other hand, software editors were not obliged to develop their software on different management system apart of Windows. It was a benefit of time and money for them. Tomorrow, if other types of management system are created, they will be obliged to adapt their offer that represents important costs. These two points of view in favor of Microsoft monopoly constituted the defense line of the American giant. Four years later, Microsoft was sued by the European Commission for the same reason as before in the US. [...]
[...] Firms are competing on a market which provides the quality of the offer and the decrease of the price. Effectively, the liberal market is very pure because everybody can compete, but only the best can find their place in the market. It obliges contractors to have serious project not to go bankrupt few years later. At the beginning of the century, supply was less important than demand. Firms were not obliged to make efforts on their offer to sell because there was a in the market. [...]
[...] Moreover, what really worried the American court was the big market share of Microsoft, which was worth more than 90%. Effectively of computers produced are set up with the Window Software. This important market share drove the tribunal to pronounce in 2000 the separation of Microsoft into 2 different firms, in order to create competition in the market. Shareholders would keep stakes in the two firms. Nevertheless, directors would not have interests in the two different structures. Only one firm will keep the brand name of Microsoft. [...]
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