The driving force of some governments is to bring the benefits of competition to formerly monopolised markets.

Mark scheme

Marking points from the official mark scheme (May/June 2017). The mark or mark type is shown in brackets.

1. Potential benefits of a competitive market: lower prices, greater output, greater allocative and productive efficiency, higher welfare, lower barriers to entry, reduced risk of price discrimination and predatory pricing, more internationally competitive. Potential limitations of monopolised markets: deadweight loss, inefficiencies Reward candidates who recognise the potential benefits of monopoly.
2. Level 4 (9-12 marks): for a sound explanation with good illustrations and a clear understanding of key features of market structures.
3. Explain the meaning of efficiency and consider forms of market failure with examples, merit/demerit goods, public goods, information failure, natural monopoly (but not monopoly).
4. Level 4 (9-13 marks): for a thorough explanation and a reasoned discussion dealing with productive and allocative efficiency and 3 possible reasons for market failure, together with a judgement.