Competition Policy Flashcards
What is public ownership?
ownership of industries, firms and other assets by central or local government
Examples of temporary nationalisation?
Northern rock and lloyds banks
What is public ownership often used for?
regulating the problem of monopoly
What is privatisation?
transfer of assets from the public sector to private sector
What are the five advantages of privatisation?
- revenue raising
- reducing public spending and government borrowing
- promotion of competition
- promotion of efficiency
- popular capitalism
What are the four disadvantages of privatisation?
- monopoly abuse
- short termism wins over longtermism
- selling the family silver
- free lunch syndrome
Explain short-termism over long termism?
- many investments that need to happen wont because wont be profitable in short-run due to dividends
Explain ‘free lunch syndrome’?
government sells to cheaply
What is liberalisation?
opening up markets to private ownership and competition, and reducing government intervention in the economy
What are policies closely linked to privatisation?
- contractualisation
- marketisation
- public private partnerships
- private finance initiative
- deregulation
What is contractualisation?
services previously provided by public sector (road cleaning) are put to private sector tender and then provided by private sector firms
What is marketisation?
provision of goods and services from the non-market sector into the market sector of the economy
What is public private partnership?
partnership between the private and public sectors to provide public services
What is priavte finance initiative?
government seeks tenders from the private secor for designing building financing anf running infrastructure projects
Define regulation?
the imposition of rules and other constraints which restrict freedom of economic action
What is external regulation?
external agency laying down and enforcing rules and restraints
What is self regulation?
a group of individuals or firms regulating themselves
Define deregulation?
removal of any previously imposed regulations that have adversly restricted competition and freedom of market activity
What are the two justifications of deregulation
- promotion of competition and market contestability through removal of artificial barriers
- removal of red tape and bureaucracy which imposes costs
What is contestable market theory?
most effective way to promote competitive behaviour is to not impose ever-more regulation but to impose deregulation
What is regulatory capture?
occurs when regulatory agencies act in the interest of regulated firms rather on behalf of the consumers
Define competition policy?
part of the govs mu
