Two business owners are discussing the idea of merging their bottled water companies to monopolize the industry in their state. What government intervention in a market economy would prevent this potential merger?

Question

(1 point)
Responses

Monopsony formation
Monopsony formation

Property protection
Property protection

Market regulation
Market regulation

Administrative ease

Answer 1

The correct response is Market regulation.

In a market economy, government intervention through market regulation can prevent mergers that would lead to monopolistic behavior, which could harm competition and consumers. Regulatory agencies, such as the Federal Trade Commission (FTC) in the United States, evaluate proposed mergers to ensure they do not substantially lessen competition in the market.