Why do we care?

  • The presence of market power reduces economic efficiency
    • Economic efficiency results from an optimal allocation of scarce resources within an economy.
    • Public policy can be established to regulate industries with market power to help mitigate this loss of efficiency.
  • Policy creation:
    1. Subsidies for startups (to introduce more competition)
    2. Price ceilings
  • Industry Regulation
    • Laws against monopolization
    • Merger laws