Govt Intervention - Protecting suppliers and Employees

Question 1

Different methods Govt intervention to protect workers

Answer 1

-Health & safety laws
-Employee contracts
-Redundancy processes
-Maximum hours at work
-The right to be in a trade union

Question 2

What are some ways the govt can restrict monopsony power

Answer 2

-Minimum prices for suppliers
-Anti-monopsony laws
-Hire an independent regulator who ensures monopsonists buy fairly

Question 3

What is nationalisation

Answer 3

The transfer of ownership of a privately-owned enterprise into the public sector

Question 4

Benefits and Drawbacks of nationalisation

Answer 4

Benefits:
-public interest
-social equality
-increase in allocative efficiency
-job security
-service quality

Advantages:
Control of essential services: Nationalization ensures that essential services (e.g., water, electricity) are provided to all citizens, regardless of income, often at lower costs.

Long-term stability: Nationalized industries can focus on long-term societal benefits (e.g., infrastructure, public health) rather than short-term profits, contributing to social welfare.

Prevents monopolies: Nationalization of natural monopolies can ensure that consumers are not exploited by private companies with monopoly power.

Drawbacks:
-Inefficiency (dynamic, X, productive)
-Lack of innovation
-Misallocation of resources
-costly for the govt

Disadvantages:
Inefficiency: State-run enterprises may be less efficient than private firms due to a lack of profit incentives and the potential for political interference.

Financial burden: Nationalized industries can place a heavy financial burden on taxpayers, especially if the industry is not profitable or requires significant investment to maintain operations.

Political interference: Nationalized industries can become subject to political influence, leading to poor decision-making and the misallocation of resources.