Economics Competition Policy

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  • Economics Competition Policy
    • Some markets have their own regulating bodies, particularly in monopolistic and oligopolistic markets
      • These bodies have responsibilities such as to regulate prices, encourage competition and ensure product standards
        • Examples of UK regulating bodies are: OFCOM - communication industry, OFWAT - water industry, OFSTED - education
    • There are several ways in which the government can intervene in a market in order to try and increase competition
      • The government can sell a publicly owned firm to the private market so that it is opened up to competition and this will encourage other firms to compete which the new firm
      • The government regulate markets and as a result it means that they can prevent firms from becoming monopolies
        • Price caps are common in the UK utility markets
      • Deregulation can also make a market more contestable and as a result it means that it's easier for new firms to enter the market.
    • The Effectiveness of competition policy is greatly affected by the amount of information available to the EU commission and the CMA
      • There is a cost though when the government have to intervene, usually those the benefits outweigh the costs

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