Price cap
- limits the amount by which firms can increase prices
Performance targets
- level of quality of service that must be met or firm is fined
- standard of service expectation as objective is set for firm
- fine acts as deterrent/warning for other firms to meet their performance
targets
Effect
- CMA regulators act as a surrogate for competition (protects consumer
interests)
- prevents monopoly exploitation of high market power and market share via higher
prices
- lower prices for consumers = increased consumer surplus at the expense of producer
surplus
- reduce x-inefficiency from lack of competition
- become allocatively efficient
- incentivises firms to remain competitive
- improved customer service
Competitive tendering
- government contracts provided to private companies
regularly rewards contracts to:
- Defence contracts: The Ministry of Defence -> Rolls-Royce (supply of equipment,
services, and infrastructure)
- Healthcare contracts: The National Health Service (NHS) -> Virgin Care (primary
care, community care, and mental health services)
- Infrastructure contracts: government -> Balfour Beatty (maintenance of
infrastructure, such as roads, bridges, and public buildings)
- Transport contracts: government -> Stagecoach (operation of transport services,
😁
such as bus and rail services)
😁
Increased competition = cheaper prices and improved quality and greater transparency
😁
Greater efficiency = innovation
☹️
Better value for money taxpayers' happy
☹️
Limited choice = potential limits to number of suppliers able to bid for contracts
Reduced quality -> prioritisation of cost cutting over quality by suppliers = reduced
☹️
standards of service.
Bureaucracy = bureaucracy = time-consuming + increased costs = delayed service
delivery.
- limits the amount by which firms can increase prices
Performance targets
- level of quality of service that must be met or firm is fined
- standard of service expectation as objective is set for firm
- fine acts as deterrent/warning for other firms to meet their performance
targets
Effect
- CMA regulators act as a surrogate for competition (protects consumer
interests)
- prevents monopoly exploitation of high market power and market share via higher
prices
- lower prices for consumers = increased consumer surplus at the expense of producer
surplus
- reduce x-inefficiency from lack of competition
- become allocatively efficient
- incentivises firms to remain competitive
- improved customer service
Competitive tendering
- government contracts provided to private companies
regularly rewards contracts to:
- Defence contracts: The Ministry of Defence -> Rolls-Royce (supply of equipment,
services, and infrastructure)
- Healthcare contracts: The National Health Service (NHS) -> Virgin Care (primary
care, community care, and mental health services)
- Infrastructure contracts: government -> Balfour Beatty (maintenance of
infrastructure, such as roads, bridges, and public buildings)
- Transport contracts: government -> Stagecoach (operation of transport services,
😁
such as bus and rail services)
😁
Increased competition = cheaper prices and improved quality and greater transparency
😁
Greater efficiency = innovation
☹️
Better value for money taxpayers' happy
☹️
Limited choice = potential limits to number of suppliers able to bid for contracts
Reduced quality -> prioritisation of cost cutting over quality by suppliers = reduced
☹️
standards of service.
Bureaucracy = bureaucracy = time-consuming + increased costs = delayed service
delivery.
