Intervention To Promote Competition And Contestability Flashcards Preview

Economics REVISION 5 (micro) > Intervention To Promote Competition And Contestability > Flashcards

Flashcards in Intervention To Promote Competition And Contestability Deck (13)
Loading flashcards...
1
Q

Example of intervention to promote competition and contestability

A

Deregulation of an industry
Rules on predatory pricing
Policies on international trade

2
Q

What does de-regulation of markets involve

A

Attempts to liberalise a market to encourage new entrants to act as challengers to established firms

3
Q

Techniques often used with the de-regulation of markets

A

Lowering some of the statutory barriers to entry

4
Q

UK example of deregulation

A

Ending the legal monopoly of the Royal Mail - fully privatised in 2013

5
Q

What is a big challenge for intervention in some industries

A

That the market has some / all of the characteristics of a natural monopoly

6
Q

What is one approach to splitting up an industry monopoly - to encourage a natural monopoly

A

Split into a core ‘network’ service & the ‘final mile’ service service to the consumer

7
Q

Two types of competition - the U.K. mail industry

A
  1. Access competition - operator collects mail from the customer
  2. End-to-end competition - operator other than the Royal Mail undertakes the entire process
8
Q

How does technology reinforce competitive pressures in markets

A
  • retailers and e-retailers

- contestable parcels industry

9
Q

What happens as a result of deregulation and market liberalisation breaking down barriers to entry

A

Market supply should be boosted, bringing down prices for consumers

10
Q

What is increased competition and heightened contestability associated with

A

Improved productive efficiency, allocative efficiency and dynamic efficiency

11
Q

What does competition limit

A

Firm’s ability to restrict output and raise prices - forcing firms to charge a Roche closer to marginal cost, allocative efficiency is improved

12
Q

What happens if firms have less pricing power

A

They are more likely to seek profitability through cost reduction, boosting productive efficiency and reducing x-inefficiency

13
Q

What creates dynamic efficiency

A

Greater capital investment and productivity