Competition Policy (AQA A-Level Economics): Flashcards
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Practise the cards
10 cards from this deck
Competition policy
Competition policy
Govt policy making imperfectly competitive markets more competitive
Consumer sovereignty
Consumer sovereignty
Consumers hold market power & determine what gets produced
Producer sovereignty
Producer sovereignty
Firms have power to manipulate consumers (occurs in monopoly)
Three parts of UK competition policy
Three parts of UK competition policy
Monopoly, mergers, and restrictive trading practices
CMA (full name)
CMA (full name)
Competition and Markets Authority
UK's cost-benefit approach to monopoly
UK's cost-benefit approach to monopoly
Assess each case: permit if benefits exceed costs of less competition
Contestable market theory key insight
Contestable market theory key insight
Threat of potential competition disciplines firms, not just actual
Sunk costs
Sunk costs
Costs incurred entering market that can't be recovered if exit
SLC (substantial lessening of competition)
SLC (substantial lessening of competition)
Criterion for investigating mergers/takeovers by CMA
Cartel agreement
Cartel agreement
Firms agree to fix prices & restrict output collectively