In examining monopoly and imperfect competition we repeatedly stressed how such market structures can give rise to inefficient outcomes, in the sense that the value placed on the last unit of output does not equal the cost at the margin. In monopoly structures this arises because the supplier uses his market power in order to maximize profits.
What can governments do about such power concentrations? Every developed economy has a body similar to Canada’s Competition Bureau. Such regulatory bodies are charged with seeing that the interests of the consumer, and the economy more broadly, are represented in the market place. Interventions, regulatory procedures and efforts to prevent the abuse of market power come in a variety of forms. These measures are examined in Regulation and competition policy.
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