A2 Micro Essay on OligopolyWatch
Can anyone give me an essay plan or any ideas on what i need to talk about in what order as i have no idea about this essay. Thanks
Oligopololies which collude will raise price and restrict output (monopoly diagram)
Talk about the potential reduction in consumer surplus (add diagram)
Also going against public interest (due to operating MC=MR) from Profit Maximising output
Policies which can tackle this:
Enforcing stricter punishment on collusion (as it's illegal in the EU) by use of CC or OFT (UK Regulators) - Such as deterrent fines.
Removing barriers to entry - removal of bureaucratic barriers to allow a higher degree of contestability.
Regulation (Maximum pricing) or RPI-X to control price levels within the oligopoly.
Nationalisation of the industry (although may lead to inefficiency).
Etc.. etc.. I'm sure you get the basic idea.
Obviously you'll analyse and evaluate some of these points (preferably 3)
With colluding oligopoly questions, think about the problems which monopolies have and counter-act that as a starting point.
Conclusion: Which policies are currently in practice, are they working? - Discuss the 6 big energy company oligopoly and how they're all still raising prices despite the kinked demand theory. Suggest a combination of policies which is likely to help with tackling collusive behaviour and explain your understanding of the potential drawback and argue why it's the most suitable decision.
Then you can sit back and enjoy looking at your masterpiece . I'm also doing A2 AQA Economics, if you need anymore help, don't hesitate to ask. All the best!
Oh hey you found me again!! My inbox stopped working for a bit when we were being economics geeks a while back! Thanks for this, this is better than anything my teacher would have said! ;D