• Join over 1.2 million students every month
  • Accelerate your learning by 29%
  • Unlimited access from just £6.99 per month

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

Extracts from this document...

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.

The above preview is unformatted text

This student written piece of work is one of many that can be found in our AS and A Level Markets & Managing the Economy section.

Found what you're looking for?

  • Start learning 29% faster today
  • 150,000+ documents available
  • Just £6.99 a month

Not the one? Search for your essay title...
  • Join over 1.2 million students every month
  • Accelerate your learning by 29%
  • Unlimited access from just £6.99 per month

See related essaysSee related essays

Related AS and A Level Markets & Managing the Economy essays

  1. Marked by a teacher

    Supermarkets in UK - An oligopily

    5 star(s)

    Examples of non pricing strategy may include: * Traditional advertising / marketing * Store Loyalty cards * Banking and other Services (including travel insurance) * In-store chemists and post offices * Home delivery systems * Discounted petrol at hypermarkets * Extension of opening hours (24 hour shopping)

  2. Explain the meaning and significance of externalities, how they arise and to what extent ...

    For example when a firm does research and development, its researchers learn valuable things about production, which in turn are transmitted through the rest of the economy and have positive impacts on other products or production processes. Taken from http://www.spea.indiana.edu/kenricha/Classes/V625/Lecture%204/Lecture_4.htm * Negative consumption externalities occur when consumption has a detrimental effect in other markets in the economy.

  1. What is a Monopoly?

    These are the sources of monopoly power because they do not allow/restrict rival firms entering their markets, so they can be the sole producer/provider in that particular market. Diagrammatical analysis of the monopoly diagram Are monopolies a bad thing? Cost Benefit Analysis The economic and social costs of monopoly Exploitation

  2. This essay compares examples of real world economics found in three studies written in ...

    Theory: Adverse selection. Adverse selection: - The pattern in which insurance tends to be purchased disproportionately by those who are most costly for companies to insure.9 This often results in insurance companies having to raise their premiums making buying insurance even less attractive to lower risk people. Three controversial studies.

  1. Micro economics environment - Government intervention

    The labour party will practise intervention in the economy if there is Macro econominics terms The regulation of industry The provision of public merit goods. (Those products or service, which are not, disturbed through the price system but on the basis of merit or need EG health and safety)

  2. The Importance of the Canadian Airline Industry.

    Several factors led to this move. Air travel was considered essential for economic development and, with national and regional integration, an adequate air transportation system could be provided to serve the public as effectively as possible (Lazar 25). It was also believed that the lack of outside competition would facilitate the development of Canada's airline industry, which was in its infant stages.

  1. what is economics

    a fall in demand for the substitute, as this product will no longer be as price competitive * Complements, on the other hand, tend to be jointly demanded o If the price of a product increases, then it will lead to the rise in price of another product which is

  2. What Are The Effects Of Tescos Oligopolistic Market Structure, On Both Consumers And Producers?

    In national accounts, operating surplus is roughly equal to distributed and undistributed pre-tax profit income, net of depreciation. POSITIVES AND NEGATIVE ASPECTS OF OLIGOPOLY WITHIN THE RETAIL/GROCERY MARKET Inefficiency was the first negative aspect regarding an oligopoly, with the main point focusing on the high prices.

  • Over 160,000 pieces
    of student written work
  • Annotated by
    experienced teachers
  • Ideas and feedback to
    improve your own work