ECON 101 Lecture Notes - Lecture 21: Deadweight Loss, Natural Monopoly, Marginal Cost
Document Summary
Monopolies fail to allocate resources efficiently and produce less than socially desirable quantity of output and charge prices above marginal cost. Using law to increase competition: mergers that will substantially lessen competition. Competition and consumer act is australia"s main competition laws. Provides the government with various ways to promote competition, and prevent. Also makes it illegal for firms with substantial market power to use their power to. Costs because some companies merge not to reduce competition but to lower restrict of harm competition costs through more efficient joint production (these types of mergers are known as synergies) Must be able to measure and compare social benefit from synergies with social costs of reduced competition. Is common for natural monopolies such as gas and electrical companies. Natural monopoly: is a monopoly in which a single firm can supply a good or service to an entire market at a lower cost than could be between two+ firms.
