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Micro economics environment - Government intervention

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Micro economics environment Government intervention Before we go on to look at the monopoly, privations and the location of industry in spefic areas we have to consider that why do the government intervene. Ecominist identify many reason why its necessary for the government to intervene in economic activity. There are nationalised industries such as the post office. There is the public service were defence, law and order, education, banks and social security. To be honest any company that can have the government have the power to investigate any industry. They can do it for monopoly so the company has the power or they can legalise it, which control the company for example the water company. So the range of control that the government can vary from 100% to very little they do have the power to do what they want so that will affect all company's. Why do the government intervene The existence of imperfect markets None or little competition Monopoly- no competition This is when generally one company takes up the whole market power The existence of externalities This is when one person or company action leads to the cost falling on other groups without there being any compensation paid bit there is been a social cost been generated from it. ...read more.


Privatisation The government policy of selling/ transferring ownership of public services and other state assets to private sector. For example British telecom or the railway system. Why would the government intervene is that for a various of reason is that a company that they run is under competition and so letting it be privatised its letting it be open to the market. the other reason why the government might want to sell off some of there business is that they need to reduce the psbr. By doing this they will be reducing the amount the borrow and will all so making a profit. Examples of this are the deregulation of the bus services and broadcasting services. Another type of policy is a Marketisation or Commercialisation, which is the increased provision of services previously undertaken in the non-market sector of the economy e.g. efficiency and competition, where a good example of this is the NHS with the internal market or the incorporation of local authority colleges. There are other arguments. There are arguments for and against For Increased competition and efficiency Expose industries to the forces of the free market thus they face compition which the forces them to become efficient. Profit would become the main motive so it would be driven to keep its costs and prices to a minimum and produce high quality goods and service so as to compete effectively. ...read more.


This is when a place is edricated of the all the smart jobs and in return may cause a ghost town due to be people moving away. For example this happened in Dundee. Effectiveness of these policies The purpose of the regional policy is to create long term employment for employees however this is not all effective. the company that will want to do business will be giving grants to encourage them to come to that area, there are normally two. With grants available for employers it is an incentive for regional policy. One grant that is available is the regional development grant (RDG) which is where a firm becomes eligible for a grant if it creates a new job in the development area the other is a regional selective assistance (RSA) and this is available to firms or organizations which create jobs in the development area, however this type of grant is discretionary. The benefits of both of these types of grant are that it has positive effects for the unemployed to gain employment and for the organizations to additional employees. Also other method I forgot to mention befor is the European Estructural Funds which are European Union's main instruments for supporting social and economic restructuring across the Union; for example the UK's allocation from the Estructural Funds for 2000 - 2006 is over �10 billion By: DANIEL CAPARROS ILLESCAS 1 ...read more.

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