Question

Identify, from media reports on Australian industry, an example of a firm that has significant monopoly power. identify the inefficiencies in outcomes that arise, or would arise, if the firm was free to exercise that power. Finally, explain how government intervention is used, or may be used, to curb that power and provide a more efficient outcome for the economy.

Answer 1

A dearth of competition in the banking & supermarket segments is paralleled by a similar level of concentration in many other Australian sectors, like domestic airlines, newspapers & health insurance etc

Lack of competition hurts customers in many obvious ways, but it also has more dangerous impacts. Most of the funds in concentrated markets goes to a tiny proportion of firms at the top. And as markets carry on to concentrate, inequality of income & wealth broadens

Modifications should be made to the Competition and Consumer Act (2010), for example, which would enable law courts to levy greater penalties for market conduct which disproportionately impacts the disadvantaged citizens. And the ACCC should be given power to prioritise such scrutiny.Promoting more competition would not just have efficacy advantages , but most probably equity effects also .