Monopoly

• A monopoly exists in areas where one company, firm, or entity is the only—or
dominant—force that sells a product or service in an industry. This gives the
entity enough power to keep other competitors away from the marketplace.
This may be because of the industry's requirement for technology,
high capital, government regulation, patents, and/or high distribution
overheads.
Oligopoly
• In an oligopoly, a group of smaller firms—usually two or more—controls the
market. However, none of them can keep the others from having significant
influence in the industry, and they may sell products that are slightly different.
Policy Towards Monopoly
It tries to prevent monopoly abuses such as:
– imposition of unfair prices
– limitation of production
– tie-in sales
– restriction of technology transfer .
The target of this policy is to regulate behavior of monopolies that exclude competition by eliminating rivals, designing tie-in
contracts or practicing predatory pricing.
POLICY TOWARD OLIGOPOLIES
• Article 101 of the Treaty on the Functioning of the European Union states that 'competition between two or more firms regarding the
limiting of competition is prohibited'.
• Article 102 of the Treaty forbids firms who are in a dominant position in the market to not abuse or take advantage of this situation.

Policy Towards Liberalization, Deregulation, and Privatization

It includes all policies to liberalize entry into restricted sectors or sectors dominated by monopolies (either public or private).
 The efficient market hypothesis (EMH) maintains that all stocks are perfectly
priced according to their inherent investment properties, the knowledge of which all
market participants possess equally.

The Different Types of Efficiency Market Hypothesis

• Weak Form
• Security prices reflect all information found in past prices and volume.
• Semi-Strong Form
• Security prices reflect all publicly available information.
• Strong Form
• Security prices reflect all information—public and private.
 OCCURS WHEN THE GOVERNMENT REMOVES OR REDUCES THE
RESTRICTIONS IN A PARTICULAR INDUSTRY TO IMPROVE BUSINESS OPERATIONS AND
INCREASE COMPETITION. THE GOVERNMENT REMOVES CERTAIN REGULATIONS WHEN
BUSINESSES COMPLAIN ABOUT HOW THE REGULATION IMPEDES THEIR ABILITY TO
COMPETE. THIS IS USUALLY THE CASE WHEN THERE IS GLOBAL COMPETITION IN A
PARTICULAR INDUSTRY.

PRIVATIZATION
THE TRANSFER OF OWNERSHIP, PROPERTY OR BUSINESS FROM THE
GOVERNMENT TO THE PRIVATE SECTOR IS TERMED PRIVATIZATION.

RECENT EXAMPLE
DURING THE 1970S IN THE UNITED STATES, THERE WERE MANY BANKING REGULATIONS AND RESTRICTIONS ON INTEREST RATES,
FROM THE LENDING END AS WELL AS FROM THE DEPOSIT END. BANKS WERE ALSO LIMITED GEOGRAPHICALLY; THEY WERE NOT
ALLOWED TO HAVE BRANCHES IN MORE THAN ONE STATE. TODAY THESE REGULATIONS ARE NO LONGER IN PLACE; THERE ARE
NO LONGER CEILINGS ON INTEREST RATES AND DEPOSITS, AND BANKS CAN OPERATE NOT JUST ACROSS STATE LINES, BUT
GLOBALLY.
BECAUSE OF THIS DEREGULATION, THE BANKING INDUSTRY IS NOW MORE COMPETITIVE, BENEFITING BOTH THE CONSUMER AND
THE ORGANIZATIONS. SOME OTHER INDUSTRIES IN WHICH DEREGULATION OFTEN OCCUR ARE UTILITIES, TELEPHONE, THE AIRLINE
INDUSTRIES, AND TRANSPORTATION IN GENERAL.

SUPPLY SIDE POLICIES - FOCUSES ON THE MARGINAL TAX RATE, THE TAX ONE PAYS ON THE LAST PESO OF INCOME HE/SHE EARNS .
FOR EXAMPLE, WHEN THE MARGINAL TAX RATE IS 35%, IF ONE EARNS AN EXTRA PESO, THE GOVERNMENT GETS 35% AND THE INDIVIDUAL

GETS 65%.