How does the government typically aim to reduce monopolies?

The approach that aligns with how governments typically aim to reduce monopolies is fragmenting industries through legislation. Governments often recognize that monopolies can lead to less competition, higher prices, and reduced innovation. To counteract these effects, they implement antitrust laws and regulations designed specifically to promote competitive markets.

Fragmenting industries can involve enforcing regulations that prevent companies from merging or acquiring competitors, reshaping market structures to ensure that no single entity holds a dominant position. This is often achieved through various ways, such as breaking up large companies or enforcing rules that limit their market power. The objective is to promote competition, which can lead to lower prices and increased choices for consumers.

In contrast, promoting mergers and acquisitions would typically contribute to increased market concentration rather than decrease it. Nationalizing major companies often means that the government takes control of industries rather than fragmenting them. Offering subsidies to monopolies does not address the issue of monopoly power; instead, it could reinforce it by providing financial incentives for monopolistic behavior. Thus, the most effective and logical method for governments to reduce monopolies lies in legislation aimed at fragmenting industries.