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The role of government regulation and general involvement in market economies
Mergers and acquisitions are governed by both the state and the federal laws. In our case, state laws will set procedures for approval of the merger as well as establish a judicial oversight in order to ensure that the shareholders receive fair values as per terms of the merger. In addition, state laws will oversee the extent to which company will protect itself from exploitation by financial and legal defenses. The top management will be protected from accusations due to the effects of acquisition of a merger.
Notably, federation laws protect the company from loss of revenues in dubious circumstances. For instance, some private law firms charges huge lump of cash in order to provide companies with the legal documents such as business certificates. Tax obligations imposed in the federal laws may be friendly than what is required in private firms (Frankel, 2013).
In regard to economic literature, the government holds the following responsibilities in a market economy:
Creating a legal structure in the economy- this is the basic function that any government should provide in order to prevent collapse of the economy. Government ensures protection of property rights, enforcement of contracts, and imposition of penalties on foul deals. This role is achieved through provision of concrete regulations and legislation requirements.
Maintaining competition- the government should fight monopoly power and non competitive behavior in the market. This is because healthy competition is the backbone to efficient market mechanisms that boosts producers and resource suppliers. Accordingly, anti-monopoly laws are designed to regulate business performance and at the same time promote competition (Welch, 2009).
Redistribution of income- The government must step up to provide relief support to the company and the surrounding community. Besides, government intervention ensures that products are sold to the customers are subsidized prices, making living possible. Social security and Medicare programs will ensure that the surrounding community is healthy and productive in growth and development of the company (Auerbach, 1988).
Promoting company’s growth and stability- Essentially, governments should promote macro-economy by making changes on its fiscal and monetary policies. Fiscal policies involve use and spending of taxes mainly by the treasury department. Besides, the government plays a crucial role in provision of public and quasi-public goods.
What is the validity of U.S intervention in the market process?
Government intervention in the market processes is crucial since all mergers need evaluation of their economic impacts. Department of Justice (DOJ) is mandated to perform this investigation, and then approval of the mergers. The possible effects of competition are also analyzed in the study.
Business regulations are imposed from the concern that mergers could purge competition between the merging companies. Antitrust Law of United States prohibits business activities that reduce competition in the market. Given that market processes in America are highly complex, it is thus important for U.S government to focus on mergers and acquisition of market processes. In addition, it is importance for the government to intervene in order to ensure distribution of resources to all spheres of growth and development. This will go hand in hand with improvement of the performance of the economy. Government intervention is also stimulated by legislations and business regulations (Auerbach, 1988).
Discuss complexities that would emerge in company’s expansion of projects.
Business analysts suggest that some of the complexities experienced during expansion of a company are as a result of exploitation of synergy as euphemism of cost-cutting. It therefore sounds difficult for the company to blend two different entities into a single growth-oriented business.
Moreover, disagreements may arise when defining the money, tools and equipments that a company owns. Some manage.............
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