3.6 Government Intervention Flashcards

1
Q

What are the types of intervention in monopoly markets?

A
  1. Price regulation
  2. Profit regulation
  3. Quality standards
  4. Performance targets
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2
Q

What are the types of intervention to promote competition and contestability?

A
  1. Promotion of small business
  2. Deregulation
  3. Competitive tendering - when the government receives bids from private firms to provide a specified product
  4. Privatisation
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3
Q

What are the types of intervention to protect suppliers and employees?

A

Suppliers
1. Monopsony power - anti monopsony laws
2. Nationalisation
Employees
1. National minimum wage
2. Legislation on health and safety
3. Permitting trade unions
4. Encouraging firms to adopt best practice

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4
Q

What are the desired outcome of government intervention?

A

Prices: affordable and stable
Profit: Limit how much they make but still make normal profit
Efficiency: Reducing wastage of valuable resources
Quality: Ensuring products are fit for purpose and contribute to a better standard of living
Choice: Wider choice improves standard of living

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5
Q

What are the limits to government intervention?

A
  1. Regulatory capture - occurs when firms influence the regulators to change their decisions/ policies to align more with the interest of the firm
  2. Asymmetric information
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