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monopoly policy


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Government policy towards monopolies. This is motivated partly by the fact that monopoly leads to an inefficient use of resources, and partly by a desire to promote a more equal income distribution than the one that tends to result if some firms have monopoly power. The two main approaches to monopoly policy are attempts to control market structure, and attempts to control monopolists' behaviour. Market structure can be tackled by regulating mergers, forcing monolithic firms to split up, or controlling anti-competitive practices that inhibit entry to monopolized markets by firms established in other markets. Monopolists' behaviour can be controlled through taking them into public ownership by nationalization, or by subjecting them to price controls and other forms of supervision by regulatory bodies such as the UK Office of Telecommunications. See also antitrust.

Subjects: Economics.


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