3.6 - Government intervention Flashcards
Competition and Markets Authority (CMA)
3.6.1 - Government intervention
Main competition policy body in the UK. Their main stated aim is to make markets work well for consumers, businesses and the economy
Competition Policy
3.6.1 - Government intervention
Any policy which seeks to promote competition & efficiency in markets and industries
Consumption tax
3.6.1 - Government intervention
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
Deregulation
3.6.1 - Government intervention
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
Laissez-faire
3.6.1 - Government intervention
A doctrine that government should not interfere with actions of business and markets
Light-touch regulation
3.6.1 - Government intervention
An approach of government to managing business behaviour - prefers to “influence” rather than “legislate/regulate”
Nationalisation
3.6.1 - Government intervention
When a government takes over a private sector company
Patent
3.6.1 - Government intervention
Right under law to produce and market a good for a specified period of time
Performance targets
3.6.1 - Government intervention
These are often imposed on utility companies to ensure that the consumer is treated fairly and within a reasonable amount of time
Price regulation
3.6.1 - Government intervention
Government control of prices, normally for utilities and other essential services
Private Finance Initiative
3.6.1 - Government intervention
The PFI is a means of obtaining private funds for public sector projects
Privitisation
3.6.1 - Government intervention
The sale of state-owned companies to the private sector, normally through a stock market listing. The opposite of nationalization
Procurement collusion
3.6.1 - Government intervention
Where companies illegally bid for large contracts by rigging bids to decide which one of them gets the contract in advance
Profit regulation
3.6.1 - Government intervention
Profit is markets where business have monopoly power may be regulated through interventions such as price capping or windfall taxes on monopoly profits
Public utility
3.6.1 - Government intervention
A company that provides public services, such as power, water and telecommunications. Regulated by government, not neceessarily state-owned
Quality standards
3.6.1 - Government intervention
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
Regulated industry
3.6.1 - Government intervention
An industry that is closely controlled by the government
Renationalisation
3.6.1 - Government intervention
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
RPI-X Pricing Formula
3.6.1 - Government intervention
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
Whistle blowing
3.6.1 - Government intervention
When one or more agents in a collusive agreement report it to the authorities
Regulatory capture
3.6.2 - The impact of government intervention
When industries under the control of a regulatory body appear to operate in favour of the vested interest of monopoly producers rather than consumers
Asymmetric information
3.6.2 - The impact of government intervention
Where parties have unequal access to information in a market
Competitive tendering
3.6.1 - Government intervention
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
