How can monopoly power be controlled?
1 Answer
I think that monopoly power can be control with government interference.
It is said that to control monopoly power, it is the government interference, which can make it happen. Government in every country follows a set of acts which aim at controlling the monopolist activities in the said country.
Government use instruments like price rationing, imposing of lump-sum taxes which effect the price structure if the monopolist.
Through price rationing, government acts as a price controller and fixes the upper limit of the price of the commodity produced in the market.
In lump-sum taxes, monopolist is required to pay a certain amount of taxes on the commodity produced.
A monopolist can only increase price of a product to a certain limit but these measures cut into monopolist profits and act as an instrument of controlling monopoly power.
In India, we have companies act which looks into the working of a monopolist and works towards restricting its trade practices.
