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Do we need government intervention in the form of Competition Policy? If so, why?
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Q. Do we need government intervention in the form of Competition Policy? If so, why? With the advent of the welfare state, laizzez faire is outdated. Competition Policy is a form of government intervention, when the market fails. It is an attempt by the government to provide competition to enhance economic efficiency by promoting or safeguarding 'competition' between firms. With the aid of rules for the conduct of firms and their structure, it aims to prevent abuse and arising of monopolies. Competition policy is concerned with the welfare implications of imperfect competition. Economic theory predicts that either due to collusion or independent actions, prices in imperfectly competitive markets may be set above the competitive level, and portray allocation inefficiency Competition Policy is based on neo classical economic theory, which assumes that society benefits when a state of perfect competition prevails in the market. Perfect competition is used as a benchmark to...
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