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However if both airports have separate ownership, there is also a possibility of there being more competition through price, investment and innovation.
Planning systems such as creating large new runways and terminals is a way that will restrict and distort competition by acting as a barrier to entry of new airports and expansion of existing airports.
However it can be altered as it allows the cost curves under monopoly to be lower because the monopolist may be able to take advantage of economies of scale.
Monopoly produces less than perfect competition and therefore creates unemployment of resources.
Market liberalisation is a way of making markets easier for new companies to enter, and this is what the competition commissionis trying to do, and to have other airports competing with them.
Edinburgh and Glasgow are both owned by BAA and that common ownership is affecting competition between these two airports.This means that it makes it difficult for new competitors to break into a market; it reduces the risk of new competition for the companies that are already in the market.Companies may lower their prices to an extent which would harm competitors to operate at a loss.The airport will also have a cost advantage, by making their prices lower, allowing existing monopoly’s to cut prices and win on price.BAA is not sufficiently regulated due to the nature of the airport legal framework, which means that there are no statutory duties on BAA or no economic licence.Disclaimer: This work has been submitted by a student.This is not an example of the work produced by our Essay Writing Service.However monopoly describes a single seller in a market with a dominant position.In a perfect competition market, it is easier for new firms to enter the market as there are fewer barriers to entry, for example due to the competing nature of the market, new firms are able to compete on price and service.The monopoly supplier will produce lower output and higher price under monopoly than a competitive industry.Monopoly outcome is less efficient from society’s point of view due to the loss of consumer and producer surplus.