Government intervention Flashcards

1
Q

How can a government intervene to control monopolies?

A
  • price regulation (prevent charging high prices by putting in an RPI - X aka price cap)
  • profit regulation (corporate tax, UK 21% to 20%)
  • quality standards
  • performance targets (regulate quality)
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2
Q

How can a government intervene to promote competition and contestability?

A
  • enhance competition between firms through promotion of small business
  • deregulation
  • competitive tendering for government contracts
  • privatisation (more competitive market and more efficiency) (assets transferred from public sector to private sector)
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3
Q

How can a government intervene to protect suppliers and employees?

A
  • restrict monopsony power of firms

- nationalisation

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4
Q

What are the limits of government intervention?

A
  • regulatory capture

- asymmetric information

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