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One of the possible barriers to entry to a Monopoly market is ‘Government Regulation’ - Leaving Cert Economics - Question 2 - 2007
Question 2
One of the possible barriers to entry to a Monopoly market is ‘Government Regulation’. Explain the underlined term and illustrate your answer with ONE example. Expl... show full transcript
Worked Solution & Example Answer:One of the possible barriers to entry to a Monopoly market is ‘Government Regulation’ - Leaving Cert Economics - Question 2 - 2007
Step 1
Explain 'Government Regulation'
Answer
Government regulation refers to the legal framework established by authorities aimed at controlling or guiding market activities. In a monopoly market, this can mean that the government grants a company the exclusive right to supply a particular good or service. This effectively limits competition, as no other companies are permitted to enter this market and provide similar products or services, allowing the regulated company to operate without direct competitors.
Step 2
Example:
Answer
An example of government regulation creating a monopoly is the provision of bus services in Dublin City by Dublin Bus. The government has awarded Dublin Bus the exclusive right to operate bus services within the city, which prevents any other company from providing similar services, thus eliminating competition.