Tobacco Regulation

http://online.wsj.com/article/BT-CO-20090612-710944.html

Brian Davies Alejandro Siquieros

In this article they talk about the new regulations that are being put onto tobacco products. It is going to allow the FDA to be able to regulate the tobacco products that are being manufactured to this day. Both the President and the House both approved this law. The President is glad to see that the parties can finally come to an agreement on how to regulate tobacco. Also, he is glad that there is finally some noticable change in Washington because they have not been able to come to an agreement before this. This is a good idea because if there is nobody that is going to regulate the tobacco industries then they are just going to be able to do what ever they want and be able to advertise where ever they want. They need to be regulated by a government branch so that they will be carefully watched over. The only drawback I see to this is that if the government gets to regulate this industry then that means that there are going to be more taxes put on tobacco products. This is just another way for the government to try and control peoples lives and get them to quit smoking. I believe that it is neccesary for the government to regulate this industry but not to single out smokers and keep on raising the prices and implimenting more taxes on them.

Stricter Labeling Urged for Bottled Water

Bottled water companies might be looking at new standards for the information that needs to appear on their labels.  As many people know, the water we get from our tap and the water coming  from bottling companies is processed differently.  People assume that because it is “purified”/ “spring” water that comes in a bottle, that it must be better than the water from the sink.  However tap water is regulated by the Environmental Protection Agency (EPA) and strictly enforces the rules and standards for their water.  Bottled water on the other hand is regulated by the Food and Drug Administration (FDA) and although their policies on water regulation are similar to the EPA’s, the FDA’s does not have the power to enforce them.

Information on municipal water is readily available and that is water we get for almost free.  For as long as bottled water has been around one would think that it would be more closely monitored and regulated than it is.  For a “$16 billion” industry, it would be a devastating blow if information was released stating the water they were bottling was not as clear or pure at the municipal tap we receive.  The FDA is now going to required that a label be put on every bottle stating where consumers can find information about how the water is processed and regulated.  If we are paying such premiums for this water I think it is necessary that the processing of it is more rigorous that EPA’s regulation of municipal tap water. I mean that is what we are paying for isn’t it?  In such an economic recession maybe the better option is to back off of this bottled water, especially if it might not be that beneficial for you anyway.  The labeling regulations that will be the new standard for bottled water might be just enough incentive for the companies to actually make sure their water is processed properly.  If consumers see information that is dissatisfactory it could leave the industry with a big problem on its hands and a great loss in revenue. 

Stephen Killion and Jason Kletzky

http://www.time.com/time/health/article/0,8599,1909297,00.html

Monopoly Ends? Another Monopoly Start?

German pharmacy firm plans to open more than one hundred pharmacies in Sweden, since Swedish government decided to end forty years of state monopoly and deregulate the pharmacy industry. Some people may think that it would be good for Swedish pharmacy market and social welfare, and the market may competitive and social welfare will be increase.

But, it may be start of another monopoly. Since the market was monopolized by state, new firm trying to enter the market may have less strategies and less economic scale. If German pharmacy firm finished setting up their pharmacy market, they will do something like advertise more, decrease the price and offer better service to make new firms difficult to enter the market. Also, social cost may be more increase than the social cost when market was monopolized by state. When state controlled market they would probably tried to minimize the social cost because they are also part of government and know what part of government should do over social welfare.

But German pharmacy firm is different than state. They will try to maximize the profits and they may success to have monopoly power over Swedish pharmacy market which will increase deadweight loss. Swedish government should think about that before German firm encroach Swedish pharmacy market.

GooYong Chung
http://www.forbes.com/feeds/ap/2009/07/01/ap6608646.html

Pedicab regulation

It has passed three weeks since a pedicab collide with an automobile while riding on the streets of New York, this ended with serious injuries of the driver and the passenger. There is a bill that is going to be passed in the next days that willl regulate the number of pedicab and their right to ride over bicycle lines. The taxi driver community is a big interested group in passing through this regulation, and even implementing greater sanctions for pedicabs who may be irresponsible when driving.
In a big city such a New York there certainly must be regulations that will enforce the security of the drivers and the passengers. They should be allow to use the biking lines in order to prevent further collisions, it is common sense that this type of transportation can not use the same roads as automobiles. The terms of the regulation are still not clear; for example they don’t mention if a prior pedicab course should be taken before going into the actual business. It also lacks regulation regarding traffic problems such as the distance that a car must have from a pedicab; or streets that may be to congested and dangerous for pedicab drivers. The benefits of a good regulation can be as great as saving lives, therefore it should cover not only the number of pedicabs driving through New York but also other possible problems.

http://cityroom.blogs.nytimes.com/2009/06/29/pedicabs-roll-toward-regulation/?scp=1&sq=regulations&st=cse

Written by:
Paola and Matthew

Should Hedge Funds Face Harsher Regulation?

Joseph Chadwick

Jonathan Jackson

James Petkovski

Throughout this entire economic downturn managers of hedge funds have received heavy criticism regarding the welfare of their clients over their own. The E.U. is already requiring that hedge funds meet higher standards of regulation that are much tougher than previous rules. AIMA, a London investing group, calls the new rules bureaucratic and argues that these policies will only cost society more. Kinetic Partners, an investing consulting group, claims that more than five billion dollars would be lost. This is also harmful to managers around the world because foreign managers would not be able to advertise their funds to E.U. investors if they do not meet these strict regulations. More criticism is argued by politicians as well claiming that hedge and private funds were not the reason for the financial collapse. Regulating private and hedge funds in this market would only be harmful to the global recovery. Blaming the hedge funds is inefficient and is only happening due to political pressures says Mats Odell Sweden’s Financial Markets Minister.

Along with domestic investment managers, the E.U. is afraid of foreign hedge funds as well. There is almost no equivalence between hedge fund regulations in Europe and the United States. Andrew Baker, the CEO of AIMA says that this could lead to a lock out of all American investment managers, or at least those that do not adhere to the new more stringent standards. The fact that British citizens would be limited to only domestic investments would be very harmful to total social welfare and therefore has sparked immense scrutiny from the European parliament and the European Council. Sweden’s Odell believes that the bill can be passed if it is highly amended and polished to be more realistic. Myner’s, Britain’s minister has vowed to get the bill amended and passed while lobbying groups have begun campaigning against any form of the bill passing. The plausibility of the bill passing has diminished but there is still hope; no force from the bill would actually take place until at least 2011.

http://www.time.com/time/business/article/0,8599,1909026,00.html

DOJ Probes Telecom Giants

     July 6—The Antitrust division of the US Justice Department has
started an informal probe of large US telecommunications
companies such as AT&T Inc. and Verizon Communications to
determine whether they are abusing their market power in the
form of exclusive agreements with handset manufacturers (such
as AT&T’s contract with Apple Inc to offer the iPhone).

Lawmakers are mainly concerned with whether such
agreements are deterring competition from smaller wireless
service providers and taking advantage of consumer
preferences for popular phones. The (ongoing and unresolved)
economic debate of the ideal extent to which an oligopolistic
industry should lean towards perfect competition or monopoly
to produce efficient outcomes and promote technical progress
is at the heart of this issue, as the telecom industry is certainly
an oligopoly in which technology and product development
occur at a relatively fast pace.

On the one hand, the general gut reaction seems to be that
more competitive industries are not only more efficient, but
create greater incentives for innovation. Elementary
economic theory maintains that as a market’s structure
strays further from perfect competition, resources are
increasingly misallocated and outcomes are increasingly
inefficient. Lending further support, intuition says that the less
influence firms have over their market, the more inclined they
are to compete for market share through price, quantity, and
product differentiation channels. Thus, protecting a firm’s
monopolization over certain markets within their industry
reduces the role of exhibiting competitive behavior to their
survival.

On the other hand, however, giving companies the opportunity
for monopolizing certain product markets may in fact promote
competition, stimulate technical development, and protect and
grow smaller firms with exclusivity rights phones that prove
immensely popular. Telecom firms, in competing through their
prices for service and products and through differentiation of their
service and products, have multiple channels through which they
might extract market power. One firm’s monopolization over a
popular product may, by capitalizing a larger share of the overall
market, incentivize other firms to cut prices or to invest in
developing and improving their own services and market offerings
in attempt to augment their own respective market shares.
Further, the opportunity for product monopolization that
exclusivity agreements provide for, creates a barrier to market
entry to outside firms that may induce prospective firms to offer
a product that might not have otherwise by protecting them from
the information and technological cannibalization effects that
emerge in markets without such exclusivity mechanisms.

Authors: Brian McGuckin, Ka-Wa Chan

Article:
http://www.reuters.com/article/newsOne/idUSTRE5654LK20090706?pageNumber
=1&virtualBrandChannel=0

This week, the F.D.A. publically warned consumers about possible suicidal thoughts and extreme depression associated with two popular drugs that aid in quitting smoking, Chantix and Zyban. The makers of both drugs have agreed to put warnings on these products to inform consumers of the recently discovered potential hazards.
These revelations concerning Chantix and Zyban are coming at a time when several other over-the-counter and prescription drugs are being cited for extremely harmful side effects. In all cases, the FDA has either required new warnings to be affixed to the products’ packaging or additional testing to take place. However, since all of these consequences have occurred after the products have been available in the market for some time, this may represent a partial failure of the FDA to detect dangerous substances before they are released. In order to protect itself from harsh public scrutiny and also to protect consumers in the long run, the FDA may decide to force new products to undergo more strenuous tests and trials before they are approved for general sale. This would represent an increase in costs and the time it takes to release a product for firms, which would therefore increase the cost of these products to society. The question is, will an increase in the cost of all new pharmaceuticals be worth the greater certainty that an extremely small percentage of these products will not harm a small portion of society?

Meredith Shores
Zach Ogaz
http://www.nytimes.com/2009/07/02/health/02drug.html?scp=2&sq=fda&st=cse