Questions on trading blocs
Trading blocs
Question 1 – short questions
- Distinguish between free trade areas (FTAs) and customs unions.
- Why do you think trading blocs have come to dominate world trade over the last 40 years?
- What do you think are the two main advantages and two main disadvantages of trading blocs?
- Outline the likely economic effects on the UK of a decision to withdraw from the EU.
- Outline the role of the WTO in terms of trading blocs.
Question 2
In May 2009 the US chip manufacturer, Intel, was fined a record £950m by the European Commission for abusing its dominant position and illegally engaging in anti-competitive behaviour against another US based chip manufacturer, AMD (Advanced Micro Devises). Intel was found guilty of offering generous rebates to a number of computer manufacturers for purchasing their chips, including Acer, Dell, and HP. Intel has roughly 70% of the global market share of chip production.
- To what extent is Intel a monopoly supplier?
- With reference to the data, explain what is meant by ‘abuse of dominant position’.
- Evaluate the effectiveness of fines as a deterrents to anti-competitive behaviour.
- To what extent could it be argued that European competition policy is simply an example of protectionism?
