Governments Promoting Competition and contestability

Question 1

How do governments promote small businesses to increase

Answer 1

Give training and grants to new entrepreneurs, make it easier for them to take loans out. Also provide tax incentives or subsidies

Question 2

Why do governments promote small businesses

Answer 2

Increases competition and contestability of a market if its easier for small businesses to access which will increase innovation and stop incumbent firms being x inefficient

Question 3

Why do governments deregulate markets

Answer 3

removal of legal barriers to entry and privatisation can help increase competition which causes incumbent firms to become more efficient

Question 4

What act increased deregulation

Answer 4

2015 deregulation act

Question 5

Problem with deregulation

Answer 5

Can lead to poor business behaviour as regulations are needed to ensure some standards

Question 6

Competitive tendering

Answer 6

When private firms compete for government contracts to supply public sector firms

Question 7

Private Finance Initiatives

Answer 7

These are private firms that will be contracted public sector work to carry out

Question 8

What is the aim of competitive tendering

Answer 8

Causes firms to be efficient and cut costs in order to provide the cheapest product that the government will always buy

Question 9

Problems with competitive tendering and private financial incentives

Answer 9

• Government collecting all bids and then deciding is costly and time consuming
• Introducing private firms into the private set runs risk of not maximising social welfare