Ways to Reduce Market Power Homework Help
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What do we understand from the term ‘ways to reduce market power?
Market power could be defined as one firm’s ability to hold or keep the price of the goods under control. It is their power to able to manipulate the prices of the product. The price is manipulated by influencing the supply, demand. Such firms are in monopoly and are known as the ‘price makers’. The firms that are in monopoly make the prices in such a way that it benefits them in turn. What are the ways to reduce this market power?
Monopolies can be broken by introduction of new and competitive firms that can break the monopoly; such firm can take away the power of price making from the monopoly firms. The government can break the monopoly by dividing it into several firms. The government can also regulate taxes so that the profits of these monopoly firms reduce.
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