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Government and Business

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Government plays an important role in ensuring that businesses act responsibly in providing quality and effective services to its public. Therefore, it may intervene in business for various reasons. For example, in case of antitrust issues, regulate prices as well as control the economy. The government may also seek to control the level of competition among different firms in the market. AT & T and T-mobile firms are involved in provision of wireless services in United States. Due to intense competition between them, the government is looking forward towards merging them.

However, this has both negative and positive effects on the firm being affected as well as to consumers. Deputy Attorney General James M. Coles argues that combination of AT & T and T-mobile would lead to loss of jobs of tens of millions of consumers (Sheffrin, 2003. This may also lead to lack of variety due to fewer choices, increased prices of services provision as well as low quality products. Innovations are also diminished in the sector of mobile services provision. This is due to lack of competition in the market. Government seeks to achieve social efficiency and equality in provision of goods and services for the benefit of the public (Kohler, 2005). Therefore, government directly or indirectly regulates public goods provided in the market.

Monopolization or reduction of number of firms in the market by the government may imply loss of variety. This is due to loss of consumer and producer surplus. Competition is essential as it leads to improvement of goods and services provision in order to retain market share by the firms (Sheffrin, 2003). According to FCC official, consumers have the rights to receive quality services. He argues that competition policy should be reviewed to ensure that there is fair competition in the market. Both powerful and growing industries have the right to participate in the market. No firm should be forced to merger provided that it is able to stand on its own.

In conclusion, government intervention in business may involve reducing competitive effects. Nevertheless, a fair consideration should be given when such activities are being undertaken. Mainly, consumers are the losers in such cases. Therefore, the outcomes are mainly unfavorable to both consumers and the targeted firms.

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