economics edexcel a A-level 25 marker microWatch this thread
ik ur meant to have an intro,point,evaluation,point,evaluation then conclusion
but could u help expand on my first point and evaluation I seem to always get in between 11-13/25
Q) 'The CMA never fail to deliver justice and fairness to the consumers they protect'
To what extent do you agree?
Firstly, the CMA helps promote contestability through deregulation and subsidies to new firms. For instance, the government could subsidise new eco-friendly energy providers until they achieve sufficient economies of scale in order to compete on their own. This will lead to increased competition from new competitors as they will steal consumers from incumbents, decreasing their demand. If the incumbent's demand decreases, this will cause an inward shift of AR and MR, so the incumbent firm will experience a decrease in price from P1 to P2, decreasing their supernormal profits. This will, in essence, encourage non-price competition enabling more choice, high quality and cheaper goods and services for consumers. Therefore the CMA "never fails" to protect consumers.
However, this depends on the strength of the barriers to entry. For example, brand loyalty and patents could prevent new firms from successfully competing with incumbent oligopolies. As Coca-cola and Pepsi are worldwide known names, loyal consumers will not switch to a new firm, like Virgin Cola had to shut down as the brand loyalty of incumbent firms were significant. As mentioned, subsidies may not be useful to compete or gain market share, hence existing firms will continue to exploit consumers, so the CMA's policies prove to be ineffective.