4.2 Market power and market failure

Cards (13)

What is a monopsony
sole buyer in a market
What is likely to happen to wages when a firm has monopsony power
a decrease in wages will most likely result, because the firm has bargaining power over employees.
What is a natural monopoly
occurs when it is more efficient for only one firm to be in the market, as duplicating the infrastructure will be wasteful
Who is the main competition regulator in the UK
the CMA
When is a merger likely to be prevented
if the resulting firm creates a monopoly with too much market power
What is RPI -x
form of price capping , whereby RPI represents the infiltration rate and "X" represents the value prices have to be cut by
Describe regulatory capture
occurs when the regulating body is likely to work in favour of the firm
What is the main purpose of performance targets
to improve social welfare
what is the red tape challenge
aims to simplify regulation for businesses
describe the theory of creative destruction
explains how firms must constantly innovate and improve productivity, else they risk being forced out the market by more modern firms
privatisation 
transfer of assets from the public to the private sector
how does regulation affect consumer surplus
increases
how does regulation affect average costs of production
increases