Markets in Action: Economic Analysis
Using the tools of economic analysis describing and explaining how a recent or upcoming domestic and/or international government policy could affect the company, its consumers and, if applicable, broader social welfare.
Graphs and figures should be included if they support your analysis.
- Briefly describe the nature and characteristics of company.
- Briefly describe the prevailing market structure including (as applicable) relevant demand- side and supply-side elasticities, externalities, public goods features, price controls, taxes, tariffs, subsidies, trade quotas and/or any other forces relevant to market efficiency and the firm’s competitiveness.
- Briefly describe the recently enacted (last twelve months) or upcoming domestic and/or international government policy facing the market. (U.S.-China Trade War)
- Describe the announced reason and some other potentially plausible (possibly unannounced) reasons why the government might want to enact the policy.
- Using the tools of economic analysis, explain how the announced government intervention will achieve its stated aims.
- Note any unintended consequences of the policy, briefly describing how they might arise.
- List and briefly describe any other reasonable means the government possess for achieving its stated aims. Include a short statement with each describing its likely market and welfare impacts. Explain why the government chose to implement its announced policy instead of adopting another approach.
- Find and briefly describe a real-life example of an essentially similar government intervention in an essentially similar market at any time previously anywhere in the world. Did that intervention produce its intended results? How can that example be used to inform your economic analysis in item 5, above?
- Conclude your essay with a critical reflection about how useful your economics approach is for understanding and providing policy guidance in the analysed situation in the real world.
Clarifications and Guidelines
- Item 5 is the centerpiece of your work. You should aim to do it well.
- Market structure describes the conditions of the market, e.g., whether it is perfectly
competitive, a monopoly, monopolistic competition, or an oligopoly.
– Justify your statement of the market structure model you use.