Impacts of govt intervention Flashcards
1
Q
What are the purposes of govt intervention on the following:
Prices
Profits
Efficiency
Quality
Choice
A
Decrease prices for consumers
Reduce supernormal profits which are achieved by exploiting consumers
Increase productive, allocative and dynamic efficiency
Increase product quality
Increased Variety through increased competition
2
Q
What are limitations to govt intervention
A
Regulatory Capture
Asymmetric information
3
Q
What is regulatory capture
A
When firms alter the decisions of regulators in their favour
