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What methods of intervention are open to UKgovernment to regulate private monopolies?

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Introduction

Economics Assignment II What methods of intervention are open to UK government to regulate private monopolies? The economies of scale can lead to monopoly also another form of imperfect competition It is often argued that monopolistic competition leads to a less efficient allocation of resources than perfect competition. The economies of scale are things which make it possible for bigger organisations or countries to produce goods and services, most of the time cheaper than the smaller organisations. Whereas the monopoly exists when there is only one firm in the industry, meaning a market situation with only one seller. Imperfect competition has limited amount of buyer, it can be called a monopolistic competition i.e. firms noticed that the price can charge is a decreasing function of the quantity it sells. Imperfect competition assumes that the sellers they do not seem to forecast the reactions of the individual competitors: this goes with the form of oligopoly. ...read more.

Middle

The United Kingdom have a more of an open view than the USA of the benefits of promoting competition, the government all they want is to be making large profits from their interference with organisations. Price controls can be applied so it can stop monopoly or oligopoly from charging excessive prices. Price controls could also be used with the objectives of redistributing incomes. Privatised industries, if left free to operate in the market, will have monopoly power and the answer to the problem for the government is to regulate their behaviour, "so that they produce at the socially optimum price and output". The government will try and prevent the abuse of monopoly power; they will also try to ensure that all mergers are in the public interests and also ensure that firms charge a price equal to the marginal cost. There is the first-best solution, this the solution of correcting a certain market distortion by marketing sure that the whole economy operates through ways of social efficiency. ...read more.

Conclusion

If the government wishes to tackle the problem of excessive monopoly profits, it can impose a lump-sum tax on the monopolist. The government can not just concentrate on one method of intervention to regulate monopolies, there are so many ways in which they can go around in achieving what they have set out 2 achieve. I think using and trying different method definitely helped the governments' objectives, as I have mentioned most of the methods above they do not always work, some of them might take weeks to have an impact in other cases they might take years. They are all part of future plans; they can not be achieved in one night it takes time. The organisations can not keep away from the government what ever they try to do the government will still get something out of them even if they do not manage to regulate the things they want to regulate some profits will be made through either income tax or indirect tax. Reference: Hand out on privatisation and regulations. Oxford Economic dictionary: John black Economics explained Internet: google search on government intervention ...read more.

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