Arguments for and against regulation Flashcards
What are the five arguments for regulation?
Market failure rectification
Protecting consumers
Sustainability
Promoting competition
Stabilising the economy
Why is market failure rectification an argument for regulation?
Because natural monopolies are examples of market failures and will often need correcting by governments in order to avoid dominance.
Why is regulation used for protecting consumers?
Consumers need protection from unfair practices where companies could have unstandardized product safety and quality.
Why is regulation used to promote sustainability?
Can be used to help adopt sustainable practices for example environmental laws which help reduce pollution and promote renewable energy.
Why is promoting competition and argument for regulation?
If monopolies are prevented it will increase competition furtherly leading to better prices and product choice for consumers.
How is stabilising the economy an example for regulation?
Regulation policies such a monetary and fiscal may help to maintain a standardised unemployment rate, inflation rate and increase the economies stability.
What are the five argument against regulation?
Regulation failure
Costs
Reduced efficiency
Government failure
Unintended consequences
Why is regulatory failure a drawback for regulation?
Sometimes the regulation may not work which can furtherly exacerbate the market failure.
Why may costs become a problem for regulations?
Implementing regulation can come at large costs for the economy which will need to be funded from tax. This tax increase will be passed onto businesses and individuals which furtherly costs them more.
How is reduced efficiency a limitation for regulation?
If the economy implements too much regulation the economy will suffer from reduced efficiency as there will be more barriers to trade and entry.
