ECON MICRO
5th Edition
ISBN: 9781337000536
Author: William A. McEachern
Publisher: Cengage Learning
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Question
Chapter 15, Problem 1.1P
To determine
The various types of government regulations of business.
Concept Introduction:
Government Regulation refers to a law that controls the way that a business can operate. Government Regulations are necessary for the proper functioning of societies and economies. These regulations help in protecting the rights and safety of citizens, justifying markets, and ensuring the delivery of public goods and services.
Expert Solution & Answer
Explanation of Solution
There are three types of Government Regulations:
- Social Regulation: Social regulation aims at protecting the interests of public from economic activity, such as control over unsafe working conditions, etc.
- Economic Regulation: Economic regulation is a form of government intervention. It is designed to influence the behavior of individuals and firms in the private sector. These regulations adjust conditions and prices in the economy, quality of industries providing services and the entry of new firms in a situation where
monopoly appears desirable.
- Antitrust Policy: Antitrust policy aims to make companies act in a competitive manner. Antitrust policy do so by breaking up companies that are monopolies, finding companies that collude to establish higher prices, and prohibiting mergers that would increase market power. This policy is based on efficiency.
Economic regulation and Antitrust Policy are discussed at length in this chapter. Both the regulations are equally necessary to protect consumer welfare in the economy.
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