Market Failure Arising from Monopoly Power (Essay Sample)
1. Introduction- Short, no discussion, no quotation, no defination, explaination and literature review.
The benefit of this essay, background, present the theory would be mentioned in this essay, outline. (200 words)
2, Government intervention
2.1 Theory section (Example: monopoly market(power), MF, DWL, LS, PS, SW)
Understanding, definition, discuss and application.
2.2 1st Gov intervention example (for example regulation or law)
Advantage and disadvantage
example from real life
critical analysis this example (advantage and disadvantage) * (important)
2.3 2st Gov intervention example
3. Conclusion (150 words)
*pls notice only use microeconomic knowledge
Market Failure Arising from Monopoly Power
Market Failure Arising From Monopoly Power
Monopoly power refers to a situation where a firm has control over the market. In this case, there some disadvantages associated with the creation of monopoly power in a market hence the presence of the government that acts as a regulator. Monopoly power in a firm implies that the firm has the mandate to dictate the market prices and control the supply of goods and products. A monopoly market is characterized by high rates because of the low number or lack of competitors. From an economic perspective, this might harm the economy in some ways. In simple terms, market failure in a particular industry is caused by the monopoly power existing in some business. The government uses some methods that are intended to correct the market failure caused by the rise of monopoly power. This paper discusses the advantages and disadvantages that arise as a result of methods that are incorporated in the correction of market failure.
Government Intervention Example
Peak Load Pricing
This is an instance of price discrimination peak and off-peak supplies at various costs. A few cases are, power has distinctive request bends at various circumstances amid the day. At the point when request is more, it is called top period, when less the off-pinnacle time frame. Lodgings at slope stations have top period in summer and off-pinnacle period in storm. Interest for woolens is more in winter (top period) and less in summer (off-pinnacle period). The movement surge on streets is more after available time. End of the week hurry to entertainment meccas is another case of pinnacle period. Thus, at whatever point the interest for a decent is not the same in the two eras and the cost to create additionally contrasts, it is gainful for the monopolist to charge distinctive costs in the two time frames The cost is higher in pinnacle period since assets are pushed considerably harder to deliver more in pinnacle period.
It guarantees effective appropriation of the utilization of power between the pinnacle and off-pinnacle periods. Net pick up happens when power is utilized lesser in the pinnacle time frame and more in the off-pinnacle time frame. The proficiency picks up from pinnacle stack valuing to a great extent rely on upon the capacity and readiness of power purchasers to lessen its utilization in the pinnacle time
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