Monopoly Policies Mind Map

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  • Monopoly Policies
    • Tax abnormal Profits
      • Tax is insignificant to the monopolies
      • The tax can then be redistributed through society
      • Reduces incentives
    • Nationalisation
      • Will produce at the allocatively efficient level of the Market where P=MC
        • Does not need to profit maximise
      • Changes the Goals of the Firm
      • Usually occurs with a natural monopoly
        • Industries loss is subsidised by government revenue
    • Regulation
      • Means controlling the quality and quantity of products in a particular market or markets through legal means.
      • Prevent anti-competitive practices
      • Set rules for the operation of the firm in the market
      • Reduce barriers to entry
      • Problems with regulation
        • Regulatory capture- where the regulator identifies the interests of the firm it regulates
        • Monitoring costs- in terms of acquiring information
        • Credibility of Regulators
      • Introduce Contestable Markets
      • Prevent anti-competitive markets
      • Set standards for goods and services
    • Price Controls
      • Regulatory bodies impose a maximum price set to MSC.




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A mind map which summarises the possible government policies on monopoly. A useful last minute reminder. Students could extend it for a more detailed analysis.

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