Econ_Lecture_11 - Prices and Controls u25cf Assuming...

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Prices and Controls Assuming perfect competitive equilibrium, government can only make things worse. With perfect competition, labor markets will perfectly compensate workers for hazards and other disamenities. Monopoly, externalities, income inequality, lack of information, and extremely inelastic demand or supply create opportunity for effective government regulation. Assuming perfectly competitive markets in equilibrium, some attack regulations as “interference” Interference makes markets possible: laws, courts, language, ethical Competition to get workers encourages businesses to create healthy and attractive workplaces Workers demand a “compensating differential” a wage premium, to take jobs in unhealthy workplaces. If they know the places are unsafe. Companies pay in wages an extra $8 million per death. Compensating differentials and higher wages encourage employers to be safe Or to hide how unsafe they are NO differentials for what workers don’t know

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