Competition Policy – AQA Spec

Competition Policy – AQA Spec

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Level: AS Levels, A Level, GCSE – Exam Boards: Edexcel, AQA, OCR, WJEC, IB, Eduqas – Economics Revision Notes 

‘Red Tape Challenge’

This encourages simpler regulation for businesses in the UK and is particularly aimed towards small businesses.

It also works towards creating new jobs and making it easier / cheaper for firms to meet environmental targets

Encouraging competition between firms through the promotion of small businesses

  • ‘Red Tape Challenge’
  • SMEs create jobs, encourage investment and promote a competition
  • Governments aim to make it easier for smaller firms to enter the market by improving access to finance and reducing the barriers to entry
  • Creative Destruction – the idea that new entrepreneurs are innovative, resulting in the expansion of the economy’s productive potential

Deregulation and Privatisation


  • Deregulation and Privatisation of the public sector encourages a more competitive environment, helping to improve economic efficiency
  • Deregulation – reducing the regulation of an industry by reducing government power and encouraging competition


  • Privatisation – assets from the public sector are sold to the private sector
  • People argue that privatised firms have the incentive to operate efficiently as they are profit making, increasing economic welfare
  • There is also allocative efficiency as firms have to produce the goods that consumers want
  • Competition may also lead to lower prices
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