Competition Policy And Contestable markets Flashcards
How can monopolies be dealt with
Compulsory breaking up Price controls Taxes on excess profits Nationalisation Privatisation Deregulation
What are PPP’s
Public private partnerships. Partnerships between the private and public sectors to provide public services
What are incumbents
The existing firms in the industry
What is nationalisation
State control of firms
What is privatisation
Sales of government owned assets to the private sector
Deregulation
The process of removing government controls from markets
What are restrictive practices
Methods used by firms to reduce competition in a market
What are 4 examples of restrictive practices
Discriminatory prices
Retail price maintenance
Refusal to supply to certain outlets or markets
Full line forcing
What indicators can be used for monopolies
Evidence of price discrimination
Merger activity
Ratios of advertising expenditure to sale
Profit margins
Ratio of capital employed to sale turnover
How can monopolies be dealt with
Compulsory breaking up Price controls Taxes on excess profits Nationalisation Privatisation Deregulation
What are the advantages of privatisation
Promoting efficiency Raise revenue for government Promoting competition Reducing the size of the public sector Promoting popular capitalism
What is PFI
A form of public - private partnership in which private sector firms undertake the bulk of the work
If the price a firm can sell there goods for is below the AVC where MR=MC a firm will do what?
Shut down immediately
