3.6 - Government intervention Flashcards

1
Q

Competition and Markets Authority (CMA)

3.6.1 - Government intervention

A

Main competition policy body in the UK. Their main stated aim is to make markets work well for consumers, businesses and the economy

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2
Q

Competition Policy

3.6.1 - Government intervention

A

Any policy which seeks to promote competition & efficiency in markets and industries

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3
Q

Consumption tax

3.6.1 - Government intervention

A

A tax imposed on the consumer of a good or service. This can be levied at the final sale level (sales tax), or at each state in the production

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4
Q

Deregulation

3.6.1 - Government intervention

A

The opening up of markets to competition by reducing one or more barriers to entry. The aim is to increase market supply, stimulate competition and innovation and drive prices down for consumers

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5
Q

Laissez-faire

3.6.1 - Government intervention

A

A doctrine that government should not interfere with actions of business and markets

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6
Q

Light-touch regulation

3.6.1 - Government intervention

A

An approach of government to managing business behaviour - prefers to “influence” rather than “legislate/regulate”

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7
Q

Nationalisation

3.6.1 - Government intervention

A

When a government takes over a private sector company

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8
Q

Patent

3.6.1 - Government intervention

A

Right under law to produce and market a good for a specified period of time

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9
Q

Performance targets

3.6.1 - Government intervention

A

These are often imposed on utility companies to ensure that the consumer is treated fairly and within a reasonable amount of time

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10
Q

Price regulation

3.6.1 - Government intervention

A

Government control of prices, normally for utilities and other essential services

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11
Q

Private Finance Initiative

3.6.1 - Government intervention

A

The PFI is a means of obtaining private funds for public sector projects

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12
Q

Privitisation

3.6.1 - Government intervention

A

The sale of state-owned companies to the private sector, normally through a stock market listing. The opposite of nationalization

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13
Q

Procurement collusion

3.6.1 - Government intervention

A

Where companies illegally bid for large contracts by rigging bids to decide which one of them gets the contract in advance

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14
Q

Profit regulation

3.6.1 - Government intervention

A

Profit is markets where business have monopoly power may be regulated through interventions such as price capping or windfall taxes on monopoly profits

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15
Q

Public utility

3.6.1 - Government intervention

A

A company that provides public services, such as power, water and telecommunications. Regulated by government, not neceessarily state-owned

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16
Q

Quality standards

3.6.1 - Government intervention

A

These are rules about the quality of output that all businesses must conform to, for example the quality of glass for double glazed windows or the quality of electrical equipment in a microwave

17
Q

Regulated industry

3.6.1 - Government intervention

A

An industry that is closely controlled by the government

18
Q

Renationalisation

3.6.1 - Government intervention

A

When a business that had been once privatised is taken back into state-ownership. For example, Directly Operated Railways, a state-run body, rescued the East Coast main line after the collapse in 2009 of National Express’s franchise. Later the franchise was returned to the private sector - it was given to a consortium of Virgin and Stagecoach

19
Q

RPI-X Pricing Formula

3.6.1 - Government intervention

A

This formula encourages efficiency within regulated businesses by taking the retail price index (i.e. the rate of inflation) as its benchmark for the allowed changes in prices and then subtracting X - an efficency factor - from it

20
Q

Whistle blowing

3.6.1 - Government intervention

A

When one or more agents in a collusive agreement report it to the authorities

21
Q

Regulatory capture

3.6.2 - The impact of government intervention

A

When industries under the control of a regulatory body appear to operate in favour of the vested interest of monopoly producers rather than consumers

22
Q

Asymmetric information

3.6.2 - The impact of government intervention

A

Where parties have unequal access to information in a market

23
Q

Competitive tendering

3.6.1 - Government intervention

A

When a project is put out to tender so that firms can bid for the right to provide the service e.g. laundry services in hospitals, tenders to maintain public roads