The paper “ A Monopoly of Electricity and Government Intervention to Regulate Appropriate Traits of Monopoly” is a breathtaking example of the assignment on macro & microeconomics. Consumers of different goods and services have always been faced with some forms of exploitation. The government not only come to their rescue but also controls certain factors. The market situations present different structures that may either be competitive or not competitive at all. Where there is a natural monopoly situation, there may be a case for government intervention, either in the form of price regulation (for example, average cost pricing; stipulating a profit level or rate that must be earned), or government ownership. This paper seeks to analyze the government inventions as far as electricity supply in New South Wales is concerned and to critically show that government intervention usually has good intentions, but often has unintended, side- effects.
The following arguments in terms of questions and answers will comprehensively aid in the analysis of the side effects of government interventions and how to help negate the problems. Explain why a government might want to regulate a monopolist? A monopoly is regarded as an enterprise that is the only seller of a good or services in a particular market.
The monopolist is the price setter and the price taker in this kind of market and is free to usually set the price it chooses without the intervention of the government, thus yielding the maximum profit possible. There has never been any effort by any government to destroy any company, corporation, or any organization for that matter, simply because they are the only sellers of a product and therefore strong.
However, governments regulate industries where a monopoly exists, or where the goods and services sold are of necessity to human life. In this case, regulating monopolists by the government would ensure the preservation of competition for quality production and price fairness, growth and freedom of entry for smaller (and infant companies), and control prices. The development of other companies in the same industry is very difficult if the market share is mainly controlled by one company. For instance, the cost of supplying and transmitting electricity has gone higher than 50 percent of the total household power cost and this figure keeps on rising.
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