Alexa Lightbourne, the home affairs minister, has been focused on finding ways to reduce the cost of living.

Although not all of her approaches make economic sense, she is at least looking for solutions to problems where many of her political colleagues, past and present, have either kicked the can down the road or washed their hands of any responsibility.

She would do well to take the time to read Duncan Card’s insightful column in The Royal Gazette on competition policy, which draws a distinction between monopolies and unfair trade practices.

It is a distinction that helps to illustrate the problem of how to ensure people are not gouged while also acknowledging the real problems businesses face in a small community.

Free-market economists will argue that the best way to ensure that prices are kept low is through competition.

This is inarguable, especially in large countries. But businesses in smaller countries, including minuscule ones such as Bermuda, are often not big enough to allow for multiple self-sustaining businesses in the same sector. Even where competition is limited, companies do not enjoy the economies of scale and bargaining power of a company like Wal-Mart.

Small businesses also endure higher fixed costs than larger ones because work that must be carried out within a small business in Bermuda would be centralised or outsourced in larger businesses.

The truth is that all companies in Bermuda are small. Thus, there was a business logic to Argus and BF&M merging. The services they offered were broadly similar. Many of the functions they had to carry out — from communications to accounting — could be done more efficiently in a larger business; the number of people required to carry out the tasks did not increase proportionately with the size of the business.

The problem is whether the merged company will offer its services at a reasonable price given its limited competition.

Bermuda has other “natural monopolies”. For decades, Belco was a natural monopoly because it did not make sense to have more than one business generate the power the island needed or to run the power distribution network. This is now changing owing to the advent of technologies such as solar power. But it is still unlikely that another company will attempt to duplicate Belco’s grid, even if it can generate its own power.

For that reason, it has long been accepted that Belco’s pricing structures should be regulated and, broadly speaking, the system has worked well, especially with the transparency around the fuel adjustment clause.

But, as large as Belco is by Bermuda’s standards, it is tiny compared with its fellow utilities in bigger countries and faces the same problem of not enjoying their economies of scale. That is why it made sense for Belco to become part of the international group Algonquin. This should have reduced costs for the business.

Most Bermudians understand the problems of scale, or the lack thereof.

But there will always be fears that prices are higher than they should be, especially when one business dominates a sector, and this is what seems to be driving Ms Lightbourne’s dual approach. On the one hand, she is attempting to monitor pricing through the cost-of-living legislation at present before the Senate, including provisions for price increase controls. On the other hand, she is trying to ensure there is competition and market fairness.

Ms Lightbourne recognised in her statement on the competition consultation that: “In an economy of our size, some concentration is inevitable. The question is whether the rules make that concentration serve customers.”

This is all very well, although there is a danger that the amount of regulation and compliance these multiple approaches may require will itself drive up prices. This is one reason why grocers have balked at the price transparency being sought.

Despite that, this is where Mr Card is right to encourage Ms Lightbourne to look at unfair trade practices such as price discrimination, deceptive or misleading advertising, price fixing and self-referencing.

There should be a market fairness law that ensures these kinds of practices — which should also include cartel-like behaviour between purportedly rival companies — can be investigated and punished.

In this way, the Government would accomplish its goal without getting into a tangle over how to manage monopolies or dominant companies that actually help the consumer.