Question 1

Geographic price discrimination where a business charges consumers a different price for
exactly the same product at different locations is just one big rip off. Zumbo, 2015
Consumers are always looking for the cheapest price for the product they need, may it be purely for
reasons of economics or bragging rights to their neighbours by being able to tell them in their face I
got the same thing for cheaper!. Geographic price discrimination is a form of third degree price
discrimination where discrimination is based on market segments, in this case geographic locations. I
would confine this essay to a crossnational boundary within Australia and not a transnational one, with
focus on Australian firms and consumers.
Firms have a profit maximising objective and it would be natural for them to price their products as
high as what they think different consumers will pay. This is based on a willing buyer/willing seller
basis in a free market system. There should not be any need for government regulation or intervention
in any form in this system. Consumer can choose not transact with the firm if there feel that they could
get the same product cheaper somewhere else. Geographic price discrimination would solely peg a
firms pricing strategy on its cost of production. However, Economics 101 would teach one that price is
set through interaction between market forces of supply and demand. Prices would vary geographical
not because of discrimination by firms but the variance of demand and supply at different locations. By
regulating price geographically, it would essentially advocate against this fundamental Economics
theory and effectively interfere with the free market. There are other factors to consider when pricing a
product aside from cost of production.
Geographic price discrimation would allow businesses to exercise their market or monopoly power to
exploit their consumers, who are at a disadvantage because they are price-takers. Geographic price
discrimination is also seen as a mechanism to increase market power for larger firms to drive smaller
businesses or rivals out of business. Regulating geographic price discrimination is seen as anticonsumer and the only beneficiaries would be small business, which constitutes anti-competitive
behaviour. If regulated, the government will impose a form of price control. Larger firms will be forced
to raise their prices and this would lead to higher prices for consumers. Consumers would, sensibly,
buy from small businesses who are able to sell at a cheaper prices. In the long haul, larger firms may no
longer be profitable and have to reduce the quality of their products to cut cost. The social cost would
constitute part of a higher cost borne by consumers.
The Trade Practices Amendment Bill 2009, better known as the Blacktown Amendment, was designed
to end the anti-competive practice of geographic price discrimination. However, the bill lapsed and was
not proceeded. The Blacktown Amendment would have required large retailers to charge the same price
at any location that is within 35 kilometers of another of their sites.
From an ethics perspective, this form of geographic price discrimination should be illegal as it seems to
involve some form of exploitation of consumer but it still remains legal. I feel that most consumers do
not know that they might be paying more for a product. Consumer education and awareness will help
in garnering more public support for regulation. I firmly believe that the choice to consumer however,
should be retained with the consumer. However, the governments role would be to assist the consumer
to make informed choices. I would suggest that a better way to approach regulation would be not for
retailers to charge the same price but for reatilers to provide the range of prices for each product just
below the price tag, indicating the range of sale prices for the same product within 35 kilometers of the
location. If consumers wants the best price, they can ask which location is selling at the lowest price
and go through the trouble of travelling there to get the best deal, only if they are willing to.

Question 2
Free market theorists are inconsistent and just want it both ways. They strongly argue against
government regulation in general, but are happy to strongly support government regulation of
intellectual property. Zumbo, 2015
The statement suggest that free market theorists are hypocrites. The irony of advocating for a free
market system but favouring regulation for intellectual property. The fundamental issue to address is
whether intellectual property law conflict with the principles of a free market.
Intellectual property literally means creations of the mind which may include music and literature. The
regulation of intellectual property is done through copyrights, patents and other forms of intangibles
that provides a form of possession over the creation. IP Australia is the Australian government agency
that administers intellectual property rights and legislations in Australia. A free market is a market
economy based solely on market forces of supply and demand with little or no government control and
free market theorist are advocates of this system.
The types of intellectual property rights that IP australia administer are:
1. Patents
2. Trademarks
3. Designs
4. Plant Breeders Rights
5. Copyright
The owner of the intellectual property rights would have exclusive rights to use, license or sell the
intellectual property. Intellectual property rights for patents, trademarks, designs and plant breeders
rights have to be applied through IP Australia but copyright protection is free and automatic in
Australia and prevents others from copying your work in any way. Intellectual property law provide
creators with financial incentives to share their work by selling rights to use their intellectual. But
financial inventives aside, there are arguments for intellectual property laws that are linked to morality
and human rights.
The two schools of thoughts for morality are:
1. Intellectual property is an extension of the individual.
The Natural Right argument would be that a person has a natural right over the labour or products
of their body and appropriation by other of this product would be unjust. This argument lies on the
principles that our right of ownership extends to our creation.
2. Intellectual property supports social progress and innovation.
The Utilitarian argument would be that intellectual property rights seek to optimise and maximise
social utility.
I feel that although intellectual property law performs fulfils its primary roles, it is often used (or
misused) for the purpose of selfish financial gain. There is a logical flaw in the idea that one has to
provide financial incentives for the by-product of imagination. Essentially, I am of view that inventors
invent for the sake of inventing. There is no need to financially incentivise them to invent. Intellectual
property laws has created a culture of exploit for financial gain and sparks a frenzy of lawsuits for
major corporations.
Regarding the statement if free market theorists are inconsistent by supporting regulation of intellectual
property, I think it differs for individual theorists:
Theorist 1: I support regulation of intellectual property because (dollars and cents/financial incentives
arguments).
There is a conflict between intellectual property law and the principles of a free market for Theorist 1.
Theorist 1 is arguing for regulation of intellectual property with the intention and supportive of the idea
to create a market to trade intellectual property. This would not be aligned with free market principles
the intellectual property market would a by-product created by government regulation/intervention.
Theorist 2: I support regulation of intellectual property because (morality/human rights arguments).

I would feel that there is no conflict between intellectual property law and the principles of a free
market for Theorist 2. Theorist 2 is advocating on grounds of morality and is separate from his free
market beliefs. The fundamental intention of Theorist 2 for regulation of intellectual property does not
contradict free market principles. Theorist 2 would protect intellectual property even if there was no
financial transaction.

Question 3
Misleading or deceptive conduct in trade or commerce is so bad that it should be a criminal
offence. Zumbo, 2015
Misleading or deceptive conduct occurs when a business engage in conduct that misleads or deceives
or is likely to mislead or deceive another party. It is a doctrine of Australian law cover by Section 19 of
the Australian Consumer Law, which is found in schedule 2 of the Competition and Consumer Act
2010. The Australian Competition and Consumer Commision (ACCC) is the government agency
responsible for the enforcement and ensuring compliance.
When Courts determine misleading or deceptive conduct, there is no need to prove an intention to
mislead or deceive. Case law has established that a non-faudulent and non-negligent statement may
generate liability.
The elements of misleading or deceptive conduct are:
1. The conduct was done in trade or commerce.
2. The conduct was misleading or deceptive or is likely to mislead or deceive.
3. The claimant relied on the conduct.
4. The claimant suffered a loss as a result of relying on the conduct.
5. Civil action was brought about within 6 years.
Examples of misleading or deceptive conduct:
1.

2.
3.
4.

Impressions
It is important to question if the overall impression created by your conduct is false or
inaccurate. A business must avoid in engaging in misleading or deceptive conduct by
disclosing relevant or additional information where it is reasonable to expect that this
information should be disclosed.
Free
Businesses should be careful when using the word free. Using the word would entail no
obligations from the consumer with no terms or conditions attached.
Misleading Statement need not be in writing
Verbal statements or even silence (failure to disclose information) can be misleading.
Know your Audience
Businesses should identify their audience when advertising to help determine the impact of the
message.

It is not possible to remove potential liability for misleading or deceptive conduct in a contract
although there has been many attempt. However, this damage can be reduced through contributory
fault, where a Court will decide the extent of the misleading or deceptive conduct and reduce the
damages proportionately and accordingly.
As a competitor, it would level the playing field by preventing these unfair tactics, which would
promote and foster competition. If misleading and deceptive conduct were to be tolerated, it would
foreign competitors or investments to enter the market due to these unfair practices. As a consumer, I
should be given all the necessary and relevant information to make an informed choice and not be
swindled by unscrupulous merchants.
Compliance standards and governing laws will have to be reviewed to include accountability as well as
stiffer fines and tougher penalties for non-compliance. In Australia, there has been progress in the area
of ensuring ethical corporate conduct. But this progress has been limited and meagerly effective. More
can be done to ensure personal accountability than just walking away with a slap on the wrist through
civil remedies. Misleading and deceptive conduct should be made a criminal offence for both specific

and general deterrence, which would be the most effective way to prevent future misconducts.