PUBLIC UTILITY REGULATION OF NATURAL MONOPOLY

Economics Assignment Help Online

PUBLIC UTILITY REGULATION OF NATURAL MONOPOLY A traditional economic argument for regulation is to prevent monopoly pricing by natural monopolists. Let us see exactly how regulators control excessive price increases of monopolists. Recall that a natural monopoly is an industry in which the most efficient way of organizing production is through a single firm. Figure 17-1 shows the way the AC, […]

INTEREST-GROUP THEORIES OF REGULATION

Economics Assignment Help Online

INTEREST-GROUP THEORIES OF REGULATION So far we have been looking at the normative publishes interest justifications for government regulation. Te should recognize, however, that regulation creates profits and. thereby produces interest groups which have vested interests in the regulatory outcomes. Sometimes, because of the interaction between regulation and politics, regulation has the perverse result of restricting entry into the regulated industry, which actually raises and […]

Dealing with Externalities

Economics Assignment Help Online

Dealing with Externalities Government regulation can also be justified when there are-externalities. The classic example of regulation of this type. which we analyze in the next chapter. is apt pollution ·measures. But there are other interesting C 5. One pervasive example is local zoning regulation, which limits how landowners can use their land. Most zoning regulations specify whether a plot […]

Remedying Information Failures

Economics Assignment Help Online

Remedying Information Failures Another reason Correlation is that consumers have inadequate information about products. For example. testing pharmaceutical drugs is expensive and scientifically complex. The government regulates drugs by allowing the sale of only those drugs which are proved “safe and efficacious.” Government also prohibits false and ‘misleading advertising. In both cases. the government is attempting to correct for the market’s failure to […]

Containing Market Power

Economics Assignment Help Online

Containing Market Power The traditional public-interest view of economic regulation is normative: that regulatory measures should be taken to reduce excessive market power. More  specifically, government should regulate industries where there are too few firms to ensure vigorous rivalry. Government should regulate industries particularly in the extreme case of natural monopoly. In earlier. times, regulation was justified on the dubious grounds that it […]

WHY REGULATE INDUSTRY

Economics Assignment Help Online

WHY REGULATE INDUSTRY Regulation restrains the unfettered market power of firms. What are the legitimate reasons why governments might choose to override the decisions made in free markets? There are three major publiNnteml jwlificalions of regulation. The first is to regulate firm behavior to prevent abuses of market power by monopolies or oligopolies. A second major reason is to remedy informational […]

TWO BRANDS OF REGULATION

Economics Assignment Help Online

TWO BRANDS OF REGULATION It is customary to distinguish between two forms of regulation. Economic:regulation involves the control of prices, entry and exit conditions, and standards of service. It is most important in industries that are natural monopolies. (Recall that a natural monopoly is a market in which the industry’s output can be efficiently produced only by a single firm.) Prominent examples […]

A. BUSINESS REGULATION THEORY AND PRACTICE

Economics Assignment Help Online

A. BUSINESS REGULATION THEORY AND PRACTICE Federal regulation of American industry goes back more than a century to the founding of the Interstate Commerce Commission (ICC) in 1887. The ICC was designed as much to prevent price wars and to guarantee service to small towns as it was to control monopoly. Later, federal’ regulation spread to banks in 1913. to […]

Promoting More Efficient Markets

Economics Assignment Help Online

Promoting More Efficient Markets Before’ studying economics, many people think that the government needs to be a watchdog guarding consumers against monopolistic abuses “and price gouging. Once encountering the invisible hand theory, we might be more reluctant to intervene, however, because economics teaches us that competitive markets can lead to efficient production and pricing. For the most part, governments in market […]