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In recent years, British Telecom, the supermarket industry and 50 private schools have been investigated by the competition authorities for limiting competition. Evaluate different ways in which governments could make markets more competitive.

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Introduction

´╗┐In recent years, British Telecom, the supermarket industry and 50 private schools have been investigated by the competition authorities for limiting competition. Evaluate different ways in which governments could make markets more competitive. The term competitive markets is used to describe an economic environment where those selling and those buying exchange goods and services at a price controlled by that market. If the government wanted to make the markets of British Telecom (hence forth known as BT), the supermarket industry and the private school industry more price competitive the government could use policies which could be through removing or significantly reducing barriers to entry. ...read more.

Middle

This could be done by giving tax relief through tax credits specifically for research, development and design. The roles of the policies would be to increase competitiveness in both price and quality which shows a significant part of the industries which would make the markets as a whole far more competitive than they previously were. To make the markets themselves more competitive, it could break up monopolies or stop the existing oligopoly markets gaining more power, which it did when it stopped Tesco buying out Safeway?s which would have given it over half of the market making it the most powerful company in the market. ...read more.

Conclusion

I feel that privatisation made BT more competitive as it removed the legal barriers to entry. For the supermarket industry the government prohibited Tesco?s buying out Safeway?s making it an even bigger monopoly which made the market stay as competitive. Although, this market could be made more competitive by the use of encouraging research, development and design through tax credits as it would be more focused to the consumers needs. Lastly the 50 private schools could be made more competitive by removing the barriers to entry by allowing more comprehensive or council run school turn into private school which would increase the supply of the school which would make them far more competitive while still making a profit and having to provide the best education. ...read more.

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