How is monopoly controlled?
- Nationalization of monopoly firm(s) by the state.
- By forming regulatory bodies such as water and electricity to check on monopoly decisions e.g. through price legislation
- By determining the standards of commodities says by National Bureau of Standards to save society of inefficiency, low quality goods and services from monopolies.
- There is need to reduce periods of patent right offered to individual producer so that other producers can readily join the market.
- By the state encouraging importation of similar commodities to introduce competition
- By the government offering credit at low interest rates to other potential entrepreneurs to increase their competitiveness.
- The government should use contractionary fiscal policy in which all monopolists are taxed heavily to reduce their power so that weak potential producers can easily compete with them.
- The government may put in place anti-monopoly laws such as laws that discourage emerging of firms.
- The government should encourage entrepreneurship education to elicit new investors
- Investigation of abuse of monopoly power to disband collusion (firms agree to set higher prices); collusive tendering. This occurs when firms enter into agreements to fix the bid at which they will tender for projects. Firms will take it in turns to get the contract and enable a much higher price for the contract; Predatory pricing(setting low prices to try and force rival firms out of business); Vertical restraints – prevent retailers stock rival products and Selective distribution
CATEGORIES Economics
TAGS Dr. Bbosa Science
