Short answers about Introduction to Political Economy Essay

Short answers about Introduction to Political Economy - Essay Example This system also seems unfair, as it imposes different tax rates on people in the same society. The successful high-income earners in society might feel prejudiced. Monopoly is mainly caused by the presence of many barriers in the market, which prevent other business players from gaining entrance into the market. Additionally, when there is no other substitute for specific products in the market, monopoly is likely to occur. In some countries, the government may also give powers to specific companies to monopolize the market legally. Finally, the ownership of patents and copyright protection results in monopoly power for some businesses. In order to increase competition, governments should provide incentives such as subsidies to companies. In addition, small companies should be exempted from meeting the standards of the bigger companies, as these lack the facilities and financial resources to meet the high standards. Breaking down bids and making them smaller is advantageous to smaller firms, as these are comfortable with smaller contracts. If these among others are observed, more new companies will be attracted into the market. Regulation of markets is important for consumers. This involves laid down standards by the regulatory body to ensure an acceptable business practice in the supply of goods and services. This helps in price control, and controlling natural monopolies, especially in the electricity supply industries and the telecommunications sector. This benefits individual companies too, as regulation encourages fair competition in companies, while protecting the consumers. The idea of capture was developed by George Stigler and argues that, if industries capture their regulatory agencies, they can benefit from regulation. They can do this by making the regulatory agencies depend on their technology and political influence. On the other hand, public-interest theory applies in market failures, when