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Cobecon - Lecture Week 4.1

This document summarizes key aspects of a mixed economy lecture, including price controls, limits on production/imports and industry entry, protectionism, minimum wage laws, crony capitalism, government spending and deficits, examples of heavy intervention, and state-owned monopolies. Regulations in a mixed economy aim to balance free markets and command control, but can lead to inefficiencies and economic problems if not implemented well.

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Maria Angelika Arcilla
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53 views

Cobecon - Lecture Week 4.1

This document summarizes key aspects of a mixed economy lecture, including price controls, limits on production/imports and industry entry, protectionism, minimum wage laws, crony capitalism, government spending and deficits, examples of heavy intervention, and state-owned monopolies. Regulations in a mixed economy aim to balance free markets and command control, but can lead to inefficiencies and economic problems if not implemented well.

Uploaded by

Maria Angelika Arcilla
Copyright
© © All Rights Reserved
Available Formats
Download as PDF, TXT or read online on Scribd
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COBECON | LECTURE

Week 4, Day 1
Professor: Dr. Roberto B. Reymundo
Room: LS - 216
Consultation Time: 2:00 pm to 4:00 pm (LS-324)

MIXED ECONOMIES
- Regulated markets and heavy government intervention
- It is said to be a mixed of Free Market and Command Economy
- Regulations under this economy are as follows:
1. Price Control - there are two types: Price Ceiling and Price Floor
a. Price Ceiling - maximum price that government impose but below the
market price. Supposed to help consumers but it does not.
In October 2022, the market price of pork was P400/kilo. The suggested
retail price (price control) was P250/kilo. This resulted to pork
disappearance in the market which led to shortage. This scenario could
also lead to rationing, long line, and black market.
b. Price Floor - minimum price imposed by the government above the
market price. Aims to help the producers.
Example: Market Price of rice: P50/kilo; Price Control: P60/kilo. This
resulting to overproduction or surplus.
2. Limits on Production/Imports
3. Limits on Entry into Industry
4. Protection from Foreign Competition/Limit Imports, Limiting Import Licenses,
High Tariffs, Quotas, Non-Tariff Barrier.
- The government limits importation in the country with the aim of
protecting the local producers.
- One example of non-tariff barriers is the quality control standard.
5. Minimum Wage - government imposed wages above the market wage rate.
Market Wage: P300/day
Minumum Wage: P554/day
- This creates more unemployment
- Mixed Economies create inefficient firms, increase public debt, increase taxation, which
leads to economic failure/collapse.

CROWNY CAPITALISM
- People who have special privileges from the government
- During the Marcos Sr. administration, these people are called “cronies”. Today, they are
referred to as PPP or Private Public Partnership.

ARCILLA, Ma. Angelika | BS - LGL (ID:121)


GOVERNMENT SPENDING > TAXES = EXCESS FISCAL DEFICIT (BUDGET DEFICIT)

Example:
P5.3 T - Government Spending
>
P3.7 T - Taxes
= P1.6 T - Can be funded by the Central Bank by printing new money*

*Newly printed money is backed up by government debt/bond**


**Bond is the promise of the government to the Central Bank to pay its debts.

EXAMPLES OF HEAVY GOVERNMENT INTERVENTION

● Free food
● Free cash
● Free housing
● Free health care
● Free education
● Free benefits for the elderly

MONOPOLY IN THE PHILIPPINES


● National Power Corporation (NAPOCOR) - electricity
● Metropolitan Waterworks and Sewerage System (MWSS) - water
● National Food Authority (NFA) - food
● Philippine National Railways (PNR) - transportation
● Light Rail Transit Authority (LRTA) - transportation
● Landbank of the Philippines - banking

ARCILLA, Ma. Angelika | BS - LGL (ID:121)

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