Regulation and Competition

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The study of government regulation and the competitive environment for business is relevant to all those who study business. This essay will describe the relationship between regulation and market structures and how regulation affects the market. The essay will detail the major legislation known as the Anti-trust laws. Industrial (economic) regulation pertains to government regulation of firms’ prices, or rates, within selected industries. This type of regulation exists in an attempt to organize monopolies. Regulated firms, however, have less incentive than competitive firms to reduce costs. Industrial regulation also seeks to help companies achieve stable profits while making the market consumer friendly. Firms operating within the monopoly and oligopoly market structures are more likely to fall under the watchful eye of regulatory statutes (Meier, K. J., Garman, E. T., and Keiser, L. R., 1998). Social Regulation is government regulation of the conditions under which goods are produced, the physical characteristics of goods, and the impact of the production and consumption of goods on society (McConnell, C. R., & Brue, S. L., Flynn, S., 2012). This type of regulation applies to all industries. The five federal regulatory commissions that provide social regulation are OSHA, FDA, EEOC, EPA, and CPSC. Social regulation breaks into daily production processes to a greater degree than industrial regulation. According to McConnell (2012), “Social regulation often dictates the design of products, the conditions of employment, and the nature of the production process. As examples, the Consumer Product Safety Commission (CPSC) regulates the design of potentially unsafe products, and the Environmental Protection Agency (EPA) regulates the amount of pollution allowed during production” (p.384). With government intervention the market can become more efficient and increase social well being. If reports of workplace safety issues, pollution, and discrimination in the...
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