- Deregulation makes it easier for a firm to set up and expand, as it reduces time/costs. This increases the number of firms entering the market improving the level of competition
- Deregulation reduces the barriers to entry into the market, as less legal expertise is needed, increasing competition
- Privatisation moves an industry from the public sector into private sector, allowing an increase in competition between firms, if more firms enter the market
- Competitive tendering for public sector contracts encourages firms to compete over price and quality, encouraging firms to become more competitive. The removal of long-term contracts also reduces the barriers to entry in the provision of public sector services
- Trade liberalisation removes barriers to entry that may stop foreign firms from being able to enter a market, encouraging more market entrants and competition
- Measures to control mergers must relate to how this improve competition
NB if no diagram candidate can achieve a maximum of Level 3.
Level
Mark
Descriptor
0
No rewardable material.
Level 1
1-3
Displays isolated, superficial or imprecise knowledge and understanding of economic terms, principles, concepts, theories and models.
Use of generic material or irrelevant information or inappropriate examples.
Descriptive approach which has no chains of reasoning.
Level 2
4-6
Displays elements of knowledge and understanding of economic terms, principles, concepts, theories and models.
Limited application of knowledge and understanding to economic problems in context.
A narrow response or superficial, only two-stage chains of reasoning in terms of cause and/or consequence.
Level 3
7-9
Demonstrates accurate knowledge and understanding of economic terms, principles, concepts, theories and models.
Ability to apply knowledge and understanding to some elements of the question. Some evidence and contextual references are evident in the answer.
Analysis is clear and coherent. Chains of reasoning in terms of cause and/or consequence are evident, but they may not be developed fully, or some stages are omitted.
Level 4
10-12
Demonstrates accurate and precise knowledge and understanding of economic terms, principles, concepts, theories and models.
Ability to link knowledge and understanding in context using appropriate examples which are fully integrated to address the broad elements of the question.
Analysis is clear, coherent, relevant and focused. The answer demonstrates logical and multi-stage chains of reasoning in terms of cause and/or consequence.
Evaluation (8 marks) - indicative content
- If tax incentives are not generous enough, they may not incentivise small business to set up
- Reducing the tax burden may not be enough for small firms/FDI to enter the market. There might be more significant factors stopping firms, such as market conditions or access to finance
- Deregulation may reduce the costs of production for incumbent firms, allowing prices to fall, making it more difficult for new firms to enter the market and compete over price, increasing barriers to entry
- If deregulation encourages more FDI, smaller domestic firms may find it hard to compete, reducing competition
- If privatisation creates a private monopoly, then competition may not be increased
- Competitive tendering may not reduce barriers to entry/improve competition if a cartel is in operation in the industry, as new firms would not be able to undercut the cartel to make an offer and win the bid
- Trade liberalisation can lead to foreign monopolies undercutting smaller domestic firms, reducing the level of competition and increasing barriers to entry in the market
Level
Mark
Descriptor
0
No rewardable material.
Level 1
1-3
Identification of generic evaluative comments.
No supporting evidence/reference to context.
No evidence of a logical chain of reasoning.
Level 2
4-6
Evidence of evaluation of alternative approaches.
Some supporting evidence/reference to context.
Evaluation is supported by a partially developed chain of reasoning.
Level 3
7-8
Evaluation recognises different viewpoints and/or is critical of the evidence, leading to an informed judgement.
Appropriate reference to evidence/context.
Evaluation is supported by a logical chain of reasoning.