Thursday, August 29, 2019

Micro and Macro - What Happened to Price, Quality and Choice in the UK Essay

Micro and Macro - What Happened to Price, Quality and Choice in the UK Spectacles Market after Deregulation - Essay Example Deregulation: There were number of regulations and deregulations that happened in the United Kingdom in the market for spectacles. In the country, more than 70 percent of the total market for spectacles is concentrated among the four big sellers or producers. In the United Kingdom, those who produce and sell spectacles and/or contact lenses are called Opticians (Davies et al., 2004, p.4). These deregulations started in the 1900s and happened in 1948, 1958, in early part of 1960s or 1970s and in 1979. Various changes have been made during implementation of these deregulations in the country. For instance, in 1900s the demand of the Opticians regarding legal recognition of status of these opticians has been met. In 1948, provision of spectacles has been incorporated in the NHS. In 1958, â€Å"The Opticians Act established a legal monopoly for sight tests and the dispensing of spectacles, and prohibited most forms of advertising†. In 1960s and 1970s, trade restrictions have been removed by the Restrictive Practices Legislation Act in many industries across the country along with this spectacle industry. During this time this removal of restriction raised the question that whether professional service industries will be allowed to enjoy these facilities or not. The most important deregulation occurred in the 1970s when The Monopolies Commission (MC) opined after investigating the Restrictive Practices in mainly in professional service industries that advertising will be prohibited in the market for spectacles. During this time, the Monopolies Commission also concluded that this reduction in advertising of spectacles will increase the prices of spectacles and will increase the level of competition among firms in the market for these products by encouraging new entrants to enter into the industry (Advertising Association (Great Britain), 2002, pp.512-517). Finally, in the 1976 and in 1979, the final deregulations were set in the market for spectacles in the co untry. During these times reports of two Price Commissions (PCs) revealed that there exists lack of competition in the market for spectacles in the country and suggested that all restrictions on advertising of spectacles have to be removed. These Price Commissions also suggested that provisions for ‘sight tests and prescriptions from the retailing of spectacles’ have to be separated in the market for spectacles in the country. In 1982, further investigation by the comprehensive Office of Fair Trading (OFT) came up with the suggestion that unregistered retailers are needed to be encouraged to enter into the market and thus to help to reduce the price level. The OFT also suggested to remove restrictions on advertising for encouraging new entry, stimulating innovation in the product and also for increasing the level of choice of consumers (Davies et al., 2004, p.9). Effects of deregulation in Price, quantity and consumers’ choice: These deregulations affect prices, quantities as well as choices of consumers of spectacles in the UK market for this product. With the introduction of the deregulation in the market for spectacles new entrants entered into the market. With the help of this new entry, competition in the market was increased and hence, companies which were selling spectacles

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