Why does the government intervene in markets to maintain competition?
Students should be able to:
- Explain and evaluate measures aimed at enhancing competition between firms and their impact on prices, output and market structure.
- Compare and evaluate the strengths and weaknesses of methods of regulation for example price capping, monitoring of prices and performance targets.
Competition Policy In Action from tutor2u
Paper 3 - June 15 (old spec, but essays require same process)
Paper 3 - June 15 (old spec, but essays require same process)
09 Explain how the determination of
prices & output by oligopolists is affected not only by the reactions of their
customers, but also by their interdependence with other producers.
(15 Marks)
10 The European commission prevents
mobile phone networks from colluding on ‘roaming charges’ when consumers travel
around Europe. Meanwhile, the EU has forced mobile phone manufacturers to cooperate
in making a single design of a phone charger.
Evaluate the view that
governments should never intervene to influence how oligopolists collude or
cooperate on such issues as fixing prices, varying output, conducting research,
developing products, or carrying out any other aspect of their business.
(25
Marks)
