In Many Countries, the Government Chooses to “Internalize” the Monopoly

question 79

Essay

In many countries, the government chooses to “internalize” the monopoly by owning monopoly providers of goods and services. (In some cases these firms are “nationalized” and the government actually buys or confiscates firms that operate in monopoly markets.) What would be the advantages and disadvantages of such an approach to ensuring the “best interest of society” is promoted in these markets? Carefully explain your answer.

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Definitions:

Interest Rate

The percentage at which interest is paid by a borrower for the use of money that they borrow from a lender.

Conglomerate

A large corporation that owns a collection of different companies in various sectors or industries.

Return Rate

The profit or deficit experienced by an investment during a certain period, represented as a portion of the initial investment's value.

Market Economy

An economic system in which economic decisions and the pricing of goods and services are guided solely by the aggregate interactions of a country's citizens and businesses and not by government intervention.