Competition policy. F583. Aims. In this lesson you will examine competition policy. You will examine why markets may fail and what the government does to correct this failure. You will also examine the reasons why governments may fail. Competition Policy.
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The monopoly equilibrium (Pm;Qm) sees the price forced above marginal cost, creating a misallocation of resources and a deadweight welfare loss.
This is in comparison to the perfectly competitive equilibrium (Pc;Qc)
Remaining Consumer Surplus
Deadweight welfare loss
AC = MC