Public Policy Towards Monoply Essay

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FC College (A Chartered University) Department of Economics Course ECO100 Basic Economics Section: B Presented by: Hamas Ashraf Roll No.:14-10547 Presented to: Prof. Saira Majeed Submitted on:29 Nov, 2010 Public Policy Towards Monopoly Public policies are made to control the economic disturbance created by the private monopolists. These are made by governments. There are majorly four main ways for the government to control the monopolies. increasing competition with anti trust laws. The anti trust laws set up by the Governments prevents private monopolies to merge with one another. So they may not effect the public economy from disturbance. Regulation of Behavior. By regulating behavior of monopolies(mainly natural) government can regulate the prices of natural monopoly companies. So the public may not face the loss. Public ownership. The private monopolies controlling the natural resources are made into public monopolies by the government. Doing nothing. Price Discrimination There are some cases in which some firms can sell Products to multiple buyers at different prices although the cost of production remains the same. This has no possibility in competitive markets because no firm Will Agree to charge Large prices for the similar product that can be bought from another firm at a smaller price. The customer will eventually buy the Product from another firm. Price discrimination is done in markets in which the similar product produced at a same cost can be charged more than the comparative product. Example can be seen in the book publishing companies, one author is a better and has more fans than the other. The author with better novel can charge higher prices for its books than the other. This will create no change in production

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