deregulation Flashcards
1
Q
idea is to
A
promote competition = greater efficiency + innovation
2
Q
Show graph of switch from
A
Pm to Pc, increase CS gains + no DWL loss of Pm output
3
Q
adv
A
- More firms mean increase consumer choice + incentive for AE
- Higher PE AND XE
- Higher Dynamic efficiency as profits can be reinvested, due to competition so long term reduction in costs
4
Q
disadv
A
- Loss of natural monopoly
- Formation of oligopolies and local monopolies
5
Q
depends on
A
- Short run vs long run contestability
- Height of other barriers to entry
- Level of government regulation
