What actions can be taken to alleviate monopoly power?

Expert Solution

The monopoly markets are failed to give the socially efficient level of production this is because of the monopoly power enjoyed by the firm. The monopoly produce less than the socially efficient outcome this makes the price above the marginal cost. So this is not going to do good for the economy, the government can limit the power of monopoly in these given ways.

By creating the monopoly more competitive- that is allowing more firm come into the market, giving them the extra support. With the support of the new firms we can definitely decrease the monopoly power.
By regulating the behaviour monopoly- This includes the aggressive pricing of the monopoly, the firm charges a price that is well above the marginal cost so the weaker sections of the society cannot be able to access the commodity.
Turning private monopolies into public enterprises.
Merger policies- That is prevents the merging of two monopoly firms.

Rahul Sunny answered 2 years ago

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