Regional Market

8/8/2019 Regional Market

1/30

REGIONAL

MARKET

CHARACTERISTICS

BY

PRATHYUSHA REDDY . Y

BHARGAVI . B

SWETHA . K


2/30

MARKET CHARACTERISTIC

POPULATION1. Households2. Urbanization

INCOME1. Per Capita GDP2. Per Capita Income3. Per Capita DiscretionaryIncome

4. Purchasing Power Parity(PPP)


3/30

CONSUMPTION PATTERNS1. per capita expenditures

on basic needs , transportation,health, education and leisure

2. Households owing of appliances, Autos,Computers, TVs

3. household debtINFRASTRUCTURE

1. roadways, railways, airways, waterways2. telecommunications3. internet

FOREIGN DIRECT INVESTMENTGEOGRAPHY

MARKET CHARACTERISTIC


4/30

GATT

General Agreement on Tariffsand Trade

treaty among nations topromote trade among membersHandled trade disputes

Lacked enforcement powerReplaced by World TradeOrganization in 1995


5/30

WTO

Provides forum for trade-relatednegotiations among 141 members based in Geneva serves as dispute mediators empowered with ability to enforce

rulings Countries found in violation of WTO rules

are expected to change policies or else facesanctions


6/30

PREFERENTIAL TRADE AGREEMENT

A preferential trade agreement is

a mechanism that confers specialtreatment on select tradingpartners. By favoring certaincountries, such agreementsfrequently discriminate againstothers.


7/30

EUROPE

European UnionEuropean Free Trade AreaEuropean Economic AreaThe Lome Convention

Central European Free TradeAssociation (CEFTA)


8/30

EUROPEAN UNION

Initially began with the 1958Treaty of Rome

Objective to harmonize national lawsand regulations so that goods, services,

people and money could flow freelyacross national boundaries

1991 Maastricht Treaty set stage fortransition to an economic union with acentral bank and single currency (theEuro)


9/30

EUROPEAN FREE TRADE AREA & ECONOMIC AREA

Austria, Finland, Sweden,Norway, Iceland,Liechtenstein, Switzerland

Free trade area Members (excluding Switzerland) chose to

establish European Economic Area (EEA) Non-EU members of the EEA are expected

to adopt EU guidelines Norway, Iceland, Liechtenstein, and

Switzerland maintain free trade agreementswith other countries as well


10/30

THE LOME CONVENTION

An accord between EU and 71countries in Africa, Caribbean,and the Pacific

Promotes trade and provides poorcountries with financial assistance

from a European Development Fund Currently working to establish a

successor agreement


11/30

CENTRAL EUROPEAN FREE TRADE

ASSOCIATION (CEFTA)

Hungary, Poland, CzechoslovakiaAllows for cooperation in many

areas including: infrastructure and

telecommunications

sub-regional projects inter-enterprise cooperation tourism and retail trade


12/30

THE MIDDLE EAST

Afghanistan, Cyprus, Bahrain, Egypt, Iran,Iraq, Israel, Jordan, Kuwait, Lebanon, Oman,Qatar, Saudi Arabia, Syria, the United ArabEmirates, Yemen Primarily Arab, some Persian and Jews 95% Muslim

3 key regional organizations

Gulf Cooperation Council Arab Maghreb Union Arab Cooperation Council


13/30

SOCIAL

ANDCULTURAL ENVIRONMENTS


14/30

ECONOMIC UNION

Includes the elimination of internalbarriers to trade (as in free trade area)AND

Establishes common external barriersto trade (as in customs union) AND Allows for the free movement of factors

of production, such as labor, capital,

and information (as in commonmarket) AND Coordinates and harmonizes economic

and social policy within the union


15/30

ECONOMIC UNION

Full evolution of economic union creation of unified central bank

use of single currency common policies on issues

ranging from agriculture to

taxation requires extensive politicalunity


16/30

FREE TRADE AREA

Two or more countries agreeto abolish all internal barriers

to trade amongst themselvesCountries continue

independent trade policies

with countries outsideagreement


17/30

For Example, Mexico Has Free Trade Agreements With31 Countries. The Table Above Lists Free Trade AreasThat The United States And Chile Have, Respectively,Established With Other Countries.


18/30

To date, dozens of free trade agreements,many of them bilateral. have beensuccessfully negotiated;

Additional examples of FTAs include the

European Economic Area, a free trade areathat includes the 25-nation European Unionplus Norway, Liechtenstein, and Iceland.

the Group of Three (G3), an FTA

encompassing Colombia, Mexico, &Venezuela; and the Closer EconomicPartnership Agreement, a free tradeagreement between China and Hong Kong.


19/30

CUSTOMS UNIONS

Evolution of Free Trade Area

Includes the elimination ofinternal barriers to trade (as inFTA) AND

Establishes common externalbarriers to trade


20/30

COMMON MARKET

Includes the elimination of internalbarriers to trade (as in free trade area)

AND Establishes common external barriers

to trade (as in customs union) AND

Allows for the free movement of factorsof production, such as labor, capital,and information


21/30


22/30


23/30

Consumer choice is limited (full retail

competition in only two economies: Chile andNew Zealand). Large consumers are able tochoose their suppliers in several economies.

Entry of IPPs, restructuring andprivatization creates competition ingeneration.

The most common supply arrangementinvolves a single buyer , usually state owned,

purchasing all electricity for sale to

consumers (Indonesia, Japan, Korea,Malaysia, Mexico, Philippines, Thailand andVietnam).


24/30

REFORM PROPOSALS IN THE APEC REGION

Introduction of private ownership,particularly in generation, throughprivatization of state owned assets and

entry of IPPs. Separation of network functions of

electricity supply industry(transmissionand distribution) from potentially

competitive functions (generation andretail supply) has been widely adoptedand proposed.


25/30

Introduction of Independent SystemOperators (ISO).Competition inwholesale and retail supply markets,

particularly for large industrialconsumers.

The approaches vary from fullownership separation to weaker forms

requiring vertically integrated firms tokeep separate accounts for eachfunction.


26/30

Introduction of full retailcompetition is considered the finalstage of a phased program of reform.

Independent regulators areconsidered a desirable feature of aliberalized economy (but only sixeconomies have already

implemented independentregulatory frameworks).


27/30

PROBLEMS WITH ABUSE OF MARKET

POWER Cost reduction can be translated intoprice discrimination between different

categories of consumers and smallindustrial customers. The effects of regulatory reform onprices depend crucially on the ability

of regulatory policies to control marketpower after reforms have beenimplemented.


28/30

There is a potential for generators to

exercise significant market power bylimiting supply to increase prices aboveestimated competitive levels:Half of the price paid for wholesale

electricity in parts of Australia 22% above competitive levels in

California

26% higher than the imputedmarginal costs of the marginalsupplier from 1992- 1994 in the UK


29/30

OPTIONS FOR DEALINGWITH ABUSE

OF MARKETPOWER:

Identifying and removing barriers to entryand restrictions on generators (reducing

licensing procedures) Compulsory divestiture of assets in the case

of horizontally integrated generators: tocreate competing generators.

Price regulation: difficulties in designingcost-effective regulation (strategicbehavior or changing demand andcapacity conditions)


30/30

Documents

Regional Market