Government policies to reduce the monopoly problem can create larger costs via political failure than the actual market failure costs.

Question

Quizplus · Accepted Answer

Government policies aimed at reducing monopolies may result in regulatory capture or rent-seeking behavior by the affected industries, leading to even higher costs than the market failure costs. Additionally, some policies may inadvertently create unintended consequences or stifle innovation, further exacerbating the problem. Hence, political failure costs associated with these policies can be greater than the market failure costs.

Government Policies to Reduce the Monopoly Problem Can Create Larger