Having a less rigorous
enforcement of existing competition laws would lead to an increase in the
firm’s mark-up (?) given the current
wages, since the firms are not being restricted, firms are now allowed to merge
more easily and thus be able to increase their market position.  Due to an increase in ?, it is expected to be
followed by a decrease in real wage paid by firms, and therefore the ‘Price-Setting’
Curve shifts downwards, from PS1 to PS2 in diagram, 5.1. Given
a state of disequilibrium, the economy moves along the ‘Wage-Setting’ Curve.  Thus, equilibrium moves from A to A’, and the
natural rate of unemployment increases from un to un’. The
higher levels of unemployment are needed to make workers accept the lower real
wage.