Government Intervention

    Cards (23)

    • What is the main purpose of government intervention in promoting competition?
      To enhance competition in the market
    • What are some instruments used to regulate monopoly power?
      Price controls, profit controls, quality standards
    • How can the CMA prevent firms from gaining monopoly powers?
      By controlling mergers
    • What are some ways the government can encourage competition?
      Promoting small businesses and deregulation
    • What factors does government intervention aim to influence?
      Prices, profits, efficiency, quality, choice
    • What can limit the effectiveness of government intervention?
      Asymmetric information and regulatory capture
    • What are the methods of government intervention to promote competition and contestability?
      • Enhancing competition through small business promotion
      • Deregulation
      • Competitive tendering for government contracts
      • Privatisation
    • What does privatisation mean in the context of government intervention?
      State-owned firms sold to the private sector
    • How do free market economists view privatisation?
      It increases efficiency and reduces costs
    • What do socialist economists argue about private sector monopolies?
      They damage customer interests with high prices
    • What is deregulation?
      Removing government controls from markets
    • What is a potential downside of deregulation?
      Encourages 'creaming' of profitable market areas
    • What was a significant consequence of the 1982 mortgage market deregulation?
      Increased accessibility of house ownership
    • How does the government encourage the growth of small businesses?
      By providing training, advice, and grants
    • What is competitive tendering?
      Inviting firms to bid for government contracts
    • What is a monopsony?
      A dominant buyer of products from suppliers
    • What can governments do to protect suppliers from monopsony power?
      Pass anti-monopsony laws and regulate practices
    • How can governments protect employees from exploitation?
      Through legal protections and minimum wage laws
    • What role do trade unions play in employee protection?
      They provide significant protection from employers
    • What is the goal of government intervention in product markets?
      To lower prices and increase consumer choice
    • What is regulatory capture?
      When firms influence regulatory bodies in their favor
    • How do firms use asymmetric information to their advantage?
      By withholding unfavorable information from regulators
    • What is the impact of voluntary codes of conduct?
      They often minimize compliance costs for firms
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