Question

A technical brief on four approaches that the government can adopt in response to inefficiencies caused by monopolies within the economy.

Answer 1

The inefficiencies created by the monopolist controlled by using four strategies by the government. That is (a) to make monopolist industries more competitive (b) regulating the behavior of a monopolist (c) changing private monopolies into public (d) doing nothing. The government can use the policy of competition law to prohibit the merging of more prominent firms from reducing the competition. The government regulates monopolies like natural monopolies. The private monopolies that are taken by the government can minimize exploitation, but the firm cannot run profitably. If doing nothing is good option but it creates deadweight loss.