Tip:
Highlight text to annotate it
X
The second type of policy is deregulation
and competition policies.
Deregulation basically involves reducing the red tape
involved in setting up businesses.
By providing a more conducive environment for setting up
businesses, firms will be attracted to Singapore,
thus increasing the aggregate supply
as productive capacity increases.
Competition policies prevent the prevalence of monopolies,
either by preventing local firms from forming monopolies,
or by opening up the market to foreign competition.
This will force firms to be less productively inefficient
as they have to compete with each other.
Such policies in Singapore include the condition
which prevents firms from merging if there is
significant reduction in competition, without
resulting in greater efficiency, innovation, or quality.
Another example would be the free trade agreements
which promote foreign competition