WHY DO WE NEED GOVERNMENT REGULATION?
markets in which government regulation is necessary - monopolies and oligopolies without government regulation - some firms would exploit consumers by using anti-competitive practices to reduce competition in the market for example: by increasing prices (e.g by reselling at a fixed price), restricting consumer choice (e.g. by refusing to supply a retailer), raising barriers to entry (e.g. by spending huge amounts of money on advertising) and market sharing (e.g might occur if there is collusion) HOW CAN A GOVERNMENT PROMOTE COMPETITION? one of the roles of the government in the economy is to promote competition and prevent anti-competitive practices for example: by encouraging the growth of small firms, lower the barriers to entry and i |
KEY TERMS
anti-competitive practices/restrictive trade practices - an attempt by firms to prevent or restrict competition assisted areas - areas designated as having problems by the UK or EU and are eligible for support competition commission - a government body that carries out investigations into mergers and markets where there may be some consumer exploitation regional policy - measures used by the government to attract firms to 'depressed' areas |