What are the methods of control of monopoly?
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Answer:
Methods of Controlling Monopoly
1. Legislative Method: Government can control monopolies by legal actions. Anti-monopoly legislation has been enacted to check the growth of monopoly. In India, the Monopolies and Restrictive Trade Practices Act was passed in 1969. The objective of this Act is to prevent the unwanted growth of private monopolies and concentration of economic power in the hands of a small number of individuals and families.
2. Controlling Price and Output: This method can be applied in the case of natural monopolies. Government would fix either price or output or both.
3. Taxation: Taxation is another method by which the monopolistic power can be prevented or restricted. Government can impose a lump-sum tax on a monopoly firm, irrespective of its level of output. Consequently, its total profit will fall.
4. Nationalisation: Nationalising big companies is one of the solutions. Government may take over such monopolistic companies, which are exploiting the consumers.
5. Consumer's Association: The growth of monopoly power can also be controlled by encouraging the formation of consumers associations to improve the bargaining power of consumers.