Overcoming the problems of Monopoly
The government has a duty to protect consumers from the high prices and low quality associated with a monopoly
- Nationalisation – if the government takes over the industry, they can set the price and quality – this is now rarely used as it was inefficient
- The government has the power to break up a monopoly into smaller firms creating competition, e.g. BAA has been legalised, forced to sell Gatwick Airport – the problem with this, is that smaller firms will not benefit from economies of scale to the same extent
- Regulation – the government can force firms to meet minimum quality standards and set a minimum price for the good
