Th2.6: Policies - Promote Competition Flashcards
What two things can be used to promote competition?
privatisation and deregulation
What is privatisation?
selling nationalised companies to private sectors
What is deregulation?
reducing restriction on businesses which restrict entry to the market, makes firms more competitive
Why is competition policy used?
to prevent monopolies in the market and make cartels and price fixing agreements illegal
What is the CMA?
the body in the UK which ensures markets are competitive and the Competition Act (1998) and Enterprise Act (2002) were passed with same aim
What is the belief about competition?
it is necessary to make firms efficient as they have to offer a cheaper or better service if there is competition
What do free market economists argue about this?
that governments have little incentive to cut costs or innovate so nationalised industries are inefficient and cause government failure
However, what may privatisation and deregulation lead to
poorer quality service or environmental issues
