3.

Market structures
I. Introduction to the topic

Market economy
The market economy is an economic system where the allocation of resources on the market
is determined primarily by supply and demand. Private ownership enables individuals to
possess factors of production. In a market economy the state has a limited share in
regulating and intervening in the economy (e.g. providing welfare benefits).

Planned economy
The planned economy is controlled and coordinated by the state. The production and the
allocation of resources are prescribed centrally by the state (pricing, production and
distribution). In state-owned companies there is full employment leading to unemployment
on the job. There is no competition on the market, therefore efficiency is not increased by
private entrepreneurs who are motivated by profits. The black economy is strong because of
the shortage economy.

Staple commodities are subsidised. The social net is relatively strong
There is not a big gap between the layers of society

The 4 magic areas of economic policy
Price stability
Low level of unemployment
Balance of payments equilibrium
Economic growth



The six different models of mixed economies

Anglo-Saxon model USA, United Kingdom
The state has only a small role in the economic processes; this is a relatively
liberalised market structure.
German model Germany (Hungary)
It is characterised by dynamic market competition and a wide social network
provided by the government (social market economy).


French model
The state has a dominating role in the economy as it is not only a regulator but a
proprietor/owner as well (state capitalism).
Austrian model Austria, Denmark, Finland, Norway
The employers negotiate directly with the representatives of the employees / trade
union. The government doesnt take part in the negotiations, but it has to approve the
decisions (social partnership).
Swedish model
The state regulates/supervises the labour market/ labour relations, and cares about
the social interests of workers. The government plays an especially important role in
redistribution (the golden mean).
Japanese model
There is an excessive supply of capital, a strictly organised education system and the
utilisation of special methods in business management.

Vocabulary exercises based on the introductory text

A. Match each item in the left-hand column with a word or phrase similar in
meaning from the list opposite

1. possess a. social strata, classes
2. welfare benefits b. people working in return for pay
3. full employment c. people who start companies
4. unemployment on the job d. difference between the amounts of money
coming into and going out of a country
5. entrepreneurs e. situation when everyone has a job
6. social net f. system of social care provided by the state
7. layers of society g. hidden unemployment
8. balance of payments h. own
9. employees i. intermediate position between two extremes
10. golden mean j. financial and other assistance provided for
lower income groups



B. For each item in the list below, find in the text a word or phrase similar in meani
1. act of setting apart for a purpose
2. money, property, skill, labour
3. availability (of goods and services) for sale
4. restricted role (two words) .
5. determined, fixed
6. earnings of a business when its income is
higher than its costs
7. basic
8. controller
9. talks aimed at coming to an agreement
10.reducing inequalities of income through
progressive taxation of income and wealth

II. Hungarian text
Exercise 1
Cover the English words and expressions given on the right and try to guess the English equivalents
of the underlined parts of the Hungarian text.

Exercise 2

After checking your guesses against the list on the right, give an oral summary of the text in English.


Vonz Kzp-Eurpa
i

.

Vilggazdasg Takcs Gbor 2007.10.26.

Magyarorszg s a tbbi j EU-tagllam
ii
a kvetk ez t vben is legalbb olyan vonz
beruhzsi clpont
iii
marad, mint amilyen az elmlt idszakban volt jsolja
iv
az Economist
Intelligence Unit (EIU). A londoni intzet
v
a vilg 82 orszgban vizsglta meg
vi
az zleti
krnyezetet
vii
a 20032007-as idszakban
viii
, illetve a 2008 2012 kztt vrhat
ix

vltozsokat. A legfontosabb kvetkeztets
x
az, hogy a kormnyok zme folyamatosan
javtja
xi
a beruhzsi feltteleket
xii
, s ennek ksznheten
xiii
kzptvon
xiv
a legtbb vizsglt
orszg magasabb pontszmra
xv
szmthat az eddiginl.

gy van ez Kelet-Kzp-Eurpban
xvi
is, ahol amint Laza Kekic, a jelents szerzje
kifejtette
xvii
az EU-csatlakozssal
xviii
kapcsolatos reformok kedvez hatsra
xix
ugyan
ezentl
xx
nem lehet szmtani, mgis egyre jobb
xxi
zleti krnyezettel szembeslhetnek
xxii
a
beruhzk. Az indexrtk emelkedse
xxiii
azonban legfeljebb egy-kt helynyi elrelpst
xxiv

biztost a vilgranglistn
xxv
, hiszen a versenytrsak
xxvi
is javtjk teljestmnyket
xxvii
.
Magyarorszg a 20082012 kztt vrhat majdnem 0.4 pontos emelkeds dacra
xxviii

tovbbra is a 36. helyet foglalja el
xxix
a sorban; a visegrdi llamok, sztorszg s
Szlovnia
xxx
is megelzi
xxxi
haznkat.

Az elemzk felhvjk a figyelmet
xxxii
arra, hogy az Egyeslt llamokban a nemzetkzi
tendencikkal ellenttben
xxxiii
stagnlni fog az zleti krnyezet sznvonala
xxxiv
. A technolgia
s az infrastruktra fejlettsge
xxxv
, valamint a munkaerpiac rugalmassga
xxxvi
ugyan tovbbra
is nagyon vonzv teszi a vilg legnagyobb gazdasgt
xxxvii
, ugyanakkor a biztonsgi
agglyok
xxxviii
, a makrogazdasgi egyenslyhiny
xxxix
, az ersd protekcionista hangok
xl
s a
feszlt klpolitikai helyzet
xli
sokat ront
xlii
az sszkpen. gy aztn az USA az eddigi
negyedikrl a kilencedik helyre csszik vissza
xliii
a nemzetkzi ranglistn. A nyugat-eurpai
orszgokban kisebb-nagyobb mrtk javulst vr az EU, br hozzteszi
xliv
, hogy a szerkezeti
reformok sebessge elmarad a kvnatostl
xlv
.








III. English Text
A Tesco in every town
The Economist, 1 November 2007


1. Two years ago, after vigorous campaigning and a judicial review, small shopkeepers
forced competition authorities to look at the conduct of the biggest supermarket chains.
They complained that the giants were abusing their market power, squeezing suppliers too
hard and selling goods at a loss to drive mom-and-pop stores off the high street. Their hope
was that regulators would stop new superstores being built. Instead, when the Competition
Commission released its provisional recommendations on October 31st, it stunned many with
proposals that are likely to result in still more supermarkets springing up.
2. The commission proposes to relax planning constraints on big new stores. It also wants to
make retailers sell land to rivals, after finding that many have been buying up sites in towns
where they are strong in order to keep out competitors.
3. Such proposals may seem counterintuitive, given widespread concern about the clout
wielded by mammoth supermarket chains: the four biggest control almost 75% of the market
and Tesco alone has 31%. The Federation of Small Businesses reckons the proposals are
letting down both shoppers and small retailers, and thinks they will entrench the dominance of
existing big supermarkets.
4. Yet where many see cause for alarm, the competition regulator sees consumer choice in
action. It thinks the rise of big supermarkets has been good for consumers, on the whole. Food
prices have fallen a real 7% since 2000, choice has widened as some 2,000 new products have
been added to the shelves each year and most people in Britain live a short drive away from at
least one large shop. It's a free country and shoppers can shop where they like, says Peter
Freeman, the chairman of the commission. The consumer is getting a reasonable deal from
the retail industry.
5. Crucially, however, the commission found that many of the benefits to consumers arise
from competition between big supermarkets. In towns with few or just one, prices rise, or the
range and quality of goods on offer decline.
1700

Important terms

judicial review - a type of court proceeding in which a judge reviews the
lawfulness of a decision or action made by a public body

Competition Commission (CC) an independent public body which conducts
in-depth inquiries into markets. These include investigating
anti-competitive conduct, monitoring competition levels,
identifying impediments to competition and playing an
advocacy role in addressing these impediments

competition authorities representatives of the Competition Commission

mom-and-pop stores small shops or businesses that are mostly family-
owned
clout wielded power or authority exercised



Extended vocabulary

vigorous: aggressive
abusing: misusing, taking unfair advantage of
stunned: shocked
relax planning constraints: make building rules or requirements (e.g. permits) less strict
sites: pieces of land on which buildings can be built
counterintuitive: contrary to common-sense expectation
mammoth: very large
entrench: establish in a position of great strength
crucially: most importantly

Comprehension questions


1. What action did small shopkeepers force competition authorities to take?




2. What was the main complaint of these shopkeepers?




3. What had these shopkeepers hoped to achieve by appealing to the Competition
Commission?





4. What recommendations did the Commission actually come up with?





5. What share of the market in Britain do these supermarket chains have?





6. How does the Federation of Small Businesses view these CC proposals?




7. How does the competition regulator (CC) see the growth of supermarkets and why?




8. Why is it good that large supermarkets compete with each other?



IV. Discussion questions


A. Discussion questions related to the article

1. What is your opinion about large multinational superstores like Tesco or Metro; are they good for
Central European economies, or do they cause more harm than good in the long run?


2. We often hear about the effect that superstores have on small retailers. What influence, if any, do
you think small shops could have on superstores?


3. What are some of the ways in which both companies and consumers benefit from increased
competition?


B. Additional discussion questions

1. What are the differences between a planned economy and a market economy?

2. Make a comparison between the different models of mixed economies, focussing on the
advantages of each.


V. Role-play

5. Getting ready for a job interview

Student:
A friend of yours has been shortlisted for interview for a job as marketing manager of a
software company. This is a very important interview and hes asking you how to prepare for
it, because he knows that you were recently successfully interviewed for a job. What advice
can you give him?


Examiner:
You are preparing for an extremely important job interview for which you have been
shortlisted. Your friend was in a similar situation recently and he managed to get the job.
You want to know what the secret of his success was. What advice can he give you?

6. Move my family or commute?

Student:
You are a manager with a European company the head office of which is to be moved to
Brussels. You have been offered a fantastic job by the new boss in Brussels. But your
wife/husband and teenage children are well settled where they are and you dont want to
move. How will you convince the new boss that its better for you to commute?


Examiner:
You are the manager of a new joint venture which has its head office in Brussels. Youre
keen to recruit one particular European manager, but you also know about his/her reluctance
to relocate from his/her own country. You want to hear about his/her reasons for not wanting
to move.



i
Attractive Central Europe
ii
EU member states
iii
investment targets
iv
predicts
v
London institute
vi
examined
vii
business environment
viii
in the period between 2003 and 2007
ix
expected
x
conclusion
xi
majority are constantly improving
xii
conditions for investment
xiii
as a result of / owing to / this
xiv
in the medium term

xv
higher index numbers
xvi
in East Central Europe
xvii
author spelled out
xviii
EU accession
xix
favourable effects
xx
from now on
xxi
better and better
xxii
face
xxiii
rise in the index number
xxiv
advancement
xxv
world ranking list
xxvi
competitors
xxvii
improve their performance
xxviii
in spite of
xxix
occupies the 36th place
xxx
Estonia and Slovenia
xxxi
overtake
xxxii
analysts call attention to
xxxiii
in contrast with
xxxiv
standard will stagnate
xxxv
highly developed state
xxxvi
flexibility of the labour market
xxxvii
the largest economy
xxxviii
safety concerns
xxxix
macroeconomic imbalance
xl
strengthening protectionist voices
xli
tense situation in foreign policy
xlii
spoils
xliii
slips back
xliv
adds
xlv
falls short of what is desirable