Dynamics of competition and competitive market processes Flashcards
1
Q
Why might a govt get involved with monopolies?
A
- restrict supply and raise prices
- deadweight loss
- no incentive for dynamic efficiency
- price makers are able to price discriminate
- undesirable if merit good
- lack of choice
- poor quality
2
Q
govt interventions for monopoly?
A
- taxes (ad valorem, per unit, windfall)
- price controls
- nudges
- subsides to new entrants
- legislation
- state provision/nationalisation
- quota/protectionism
- patents
- finishing monopolies when regulations are broken
- privatisation
- stop mergers
- break monopolies
- lowering barriers
3
Q
what is protectionism?
A
pushes local firms to compete nationally as it increases barriers to trade, removing this will increases choice and availability to consumers
4
Q
what is competition policy?
A
intervention which aims to make market more competitive
5
Q
what is the CMA?
A
competition and market authority
6
Q
what are the three parts of competition policy?
A
- monopoly
- mergers
- restrictive trade practices
7
Q
what data does the CMA use?
A
- market structure
- concentration ratio
- performance indicators
- conduct
- consumer and trade complaints
- compare prices
8
Q
What is moral hazard?
A
taking unnecessary risks because you know the government can bail you out
9
Q
what is restrictive trade practicing?
A
- linear integration
- collusion
- price discrimination
- refusal to supply a particular retailer
- full line forcing
