Industrial regulation pertains to the government regulation of firms’ prices or rates within industries. These regulations are in existence to prevent companies from forming a monopoly, to promote competition and achieve allocative efficiency. (McConnell, Brue & Flynn, 2011) In the mid 1800s, as industry grew, many industries began to take on the look of a monopoly by being dominant firms. They used questionable pricing tactics and were charging their customers high prices. The customers and businesses whom relied on these industries began to complain to the government. The government responded with the Sherman Act of 1890.
Industrial regulations protect consumers by stopping companies and industries from creating a monopoly giving consumers no other source of goods that the company may offer. This would cause the prices to skyrocket. With industrial regulations, being a monopoly is against the law and monitored by the government. A company is regulated making competition necessary which keeps prices to consumers more affordable.
In addition, company suppliers are protected due to industrial regulations companies cannot mandated who their suppliers supply to or make deals outside of what is regulated.
Oligopolies and monopolies are affected by industrial regulations. An example would be the US aluminum industry. “This industry has 3 huge firms that dominate the entire national market.” (McConnell, Brue & Flynn, 2011, p. 223)
Many utilities are monopolies by having the entire market share in certain areas. With deregulation of these utilities, the market becomes open and competition for market share begins.
Social regulation is a set of departments created by the government to protect consumers and society from faulty goods and to protect their health and social day-to-day activities in from their homes to their workplace and giving everyone an equal opportunity to seek and enjoy employment....
Please join StudyMode to read the full document