Rationales_for_regulation[1]

Rationales_for_regulation[1] - 3) Asymmetrical Information...

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Q: Why Regulate Business? A: Market Failures 1) Monopoly & Oligopoly 2) “Natural” Monopoly 3) Asymmetrical Information 4) Externalities 5) Employee Rights
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Q: Why Regulate Business? A: Market Failures Anti-competitive practices: • Price-fixing • Market Allocation • Predatory Pricing • Product “Tying” 1) Monopoly & Oligopoly (Market power) Examples: Department of Justice (DOJ) Federal Trade Commission (FTC)
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Regulated Utilities: • Phone • Electricity • Natural Gas • Water • Garbage • Cable TV • Railroads 2) “Natural” Monopoly (High fixed costs are barriers to entry) Examples : State Public Utilities Commissions (PUC) Interstate Commerce Commission (ICC) Q: Why Regulate Business? A: Market Failures
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Seller has more information than buyer: • Stocks, Bonds, Mortgages • Food & Drug Safety • Product Safety • Truth-in-Advertising • Fraud • Warranties
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Unformatted text preview: 3) Asymmetrical Information (Caveat Emptor) Examples : Securities & Exchange Commission (SEC) Federal Trade Commission (FTC) Consumer Product Safety Commission (CPSC) Q: Why Regulate Business? A: Market Failures Pollution : Air Water Soil Noise Visual (land use) 4) Externalities (Costs imposed on 3rd parties) Examples : Environmental Protection Agency (EPA) Local Planning/Zoning Commissions Q: Why Regulate Business? A: Market Failures Rights: Equal treatment (race, gender, religion, age, etc.) Safety Privacy Minimum wage, overtime, pensions Health care 5) Employee Rights (Not adequately provided by markets) Examples: Equal Employment Opportunity Commission (EEOC) Occupational Safety & Health Administration (OSHA) Q: Why Regulate Business? A: Market Failures...
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Rationales_for_regulation[1] - 3) Asymmetrical Information...

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