Pearson Edexcel · A-Level · Economics B
Course version: 9EB0 · Version from Sept 2015
A) Promoting competition through: o preventing anti-competitive practices…
Full specification wording
Business regulation: a) Promoting competition through: o preventing anti-competitive practices o controlling mergers and takeovers o privatisation
Governments promote competition to enhance market efficiency and consumer welfare.
Checked against the Pearson Edexcel 9EB0 specification (opens in a new tab) on .
- Point 1 of 5
- 4 key terms
Study notes
From the checked teaching notes for this specification point.
The idea
Governments promote competition to enhance market efficiency and consumer welfare. This is achieved by preventing anti-competitive practices, such as price-fixing cartels or predatory pricing, which restrict choice and inflate prices. Regulatory bodies control mergers and takeovers to prevent the creation of monopolies that could abuse their dominant market position. For example, a merger between two major supermarkets might be blocked if it significantly lessens local competition. Furthermore, privatisation transfers state-owned assets to the private sector, introducing profit motives and competitive pressures that can drive efficiency, lower costs, and stimulate innovation in previously monopolised industries.
What earns the marks
- Identify examples of anti-competitive practices, such as collusion, limit pricing, and predatory pricing.
- Explain the role of competition authorities in investigating and blocking mergers that substantially lessen competition.
- Describe how privatisation introduces competition into markets previously dominated by state monopolies.
- Analyse the benefits of promoting competition, including lower prices, increased choice, and dynamic efficiency.
Common mistakes and how to put them right
Assuming all mergers are blocked by regulators.
Put it right: Regulators only block or impose conditions on mergers that are deemed to substantially lessen competition.
Confusing privatisation with deregulation.
Put it right: Privatisation is the transfer of ownership from the public to the private sector, whereas deregulation is the removal of barriers to entry.
Believing anti-competitive practices only occur in monopolies.
Put it right: Oligopolies frequently engage in anti-competitive behaviour, such as cartel formation and price fixing.
Exam tips
- Be prepared to identify the specific regulatory action required for different scenarios, such as fining a cartel versus blocking a merger.
- Remember that the primary goal of controlling mergers and preventing anti-competitive practices is to protect consumer welfare.
- Use the concept of contestability when discussing the impacts of privatisation and the threat of new entrants.
Try the lesson
The start of the Business regulation: a) Promoting competition through: o preventing anti-competitive practices o controlling mergers and takeovers o privatisation lesson, made from checked teaching notes for this specification point.
Have a go first
Which of the following is a method used by governments to promote competition in a market?
Listen
Governments promote competition to enhance market efficiency and consumer welfare. This is achieved by preventing anti-competitive practices, such as price-fixing cartels or predatory pricing, which restrict choice and inflate prices. Regulatory bodies control mergers and takeovers to prevent the creation of monopolies that could abuse their dominant market position. For example, a merger between two major supermarkets might be blocked if it significantly lessens local competition. Furthermore, privatisation transfers state-owned assets to the private sector, introducing profit motives and competitive pressures that can drive efficiency, lower costs, and stimulate innovation in previously monopolised industries. A strong answer earns marks for these points. Identify examples of anti-competitive practices, such as collusion, limit pricing, and predatory pricing. Explain the role of competition authorities in investigating and blocking mergers that substantially lessen competition. Describe how privatisation introduces competition into markets previously dominated by state monopolies. Analyse the benefits of promoting competition, including lower prices, increased choice, and dynamic efficiency. A common slip: Assuming all mergers are blocked by regulators. Instead, regulators only block or impose conditions on mergers that are deemed to substantially lessen competition. Exam tip: Be prepared to identify the specific regulatory action required for different scenarios, such as fining a cartel versus blocking a merger.
Key words
Say what each word means before you turn the card.
Anti-competitive practices
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Mergers and takeovers
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Privatisation
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Consumer welfare
Try answering aloud or in your head before turning the card.
See every definition
- Anti-competitive practices
- Practices such as price-fixing cartels or predatory pricing, which restrict choice and inflate prices.
- Mergers and takeovers
- Combinations of firms that regulatory bodies control to prevent the creation of monopolies that could abuse their dominant market position.
- Privatisation
- The transfer of state-owned assets to the private sector, introducing profit motives and competitive pressures.
- Consumer welfare
- The benefit to consumers that governments promote competition to enhance.
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