When a decision needs to be taken quickly, a tax may be too cumbersome. Banning diesel cars in city centres. Should government legalise and tax cannabis? The government appointed regulators who can impose price controls in most of the main utilities such as telecommunications, electricity, gas and rail transport. For example, Marver H. Bernstein, Regulating Business by Independent Commis- sion … Can and should governments use regulation to control the FAANGs? Boston House, For example, in most countries, regulation controls the sale and consumption of alcohol and prescription drugs, as well as the food business, provision of personal or residential care, public transport, construction, film and TV, etc. Regulations can limit or prevent: Demerit goods (alcohol, drugs, smoking) Goods with negative externalities (burning of coal) Abuse of monopoly power. Our site uses cookies so that we can remember you, understand how you use our site and serve you relevant adverts and content. Depending on their attitudes towards economic and personal 214 High Street, e.g. Problems that regulators of markets / industries can face In the second case, government regulation and restriction is an effective way of regulating a monopoly. Raising the legal age may encourage people to break the law. Monopolies, especially those that are difficult to abolish (natural monopoly), are often regulated. The following are some of the more commonly observed regulatory objectives. (e.g. He writes extensively and is a contributor and presenter on CPD conferences in the UK and overseas. Concerted practice, such as firms colluding instead of competing. Also, if drugs are illegal, they may be more likely to be poor quality. The World Bank’s senior vice president and chief economist, Kaushik Basu, explains this is because regulations affect the “nuts and bolts” and “plumbing” in the economy—the fundamental moving parts that are often too deep for us to see or notice. all types of government regulation; we therefore have structured the method- ological discussion so that it has broad applicability. Learn more. Regulations can limit or prevent: Cracking Economics Deregulation often refers to removing barriers to competition. Limits on the amount of pollution engines can create. For example: Fixing price, such as a number of book publishers fixing the minimum resale price of books sold by separate book stores, or raising price together, or fixing output. you could ban cars in city centres, this would reduce pollution but could have adverse economic effects on business. The effects of regulation on economic activity are difficult to measure and thus too often are neglected in the debates over economic policy. A good example of this is the attempt to introduce more competition for British Telecom. Should the legal driving age be increased to 21? Examples include the “Continental” bills issued by the U.S. Congress before the United States Constitution; paper versus gold ducats in Napoleonic era Vienna, where paper often traded at 100:1 against gold; the South Sea Bubble, which produced bank notes not representing sufficient reserves; and the Mississippi Company scheme of John Law. Illegal to drink driving above a certain limit. Examples include the electricity and cable industries. We can custom-write anything as well! Prohibition on certain classes of drugs – cocaine, heroin, cannabis. Source: Australian Government Department of the Environment and Energy Basic economics teaches us that unregulated markets are highly inefficient in dealing with externalities like pollution. The values and preferences of citizens, communities and society as a whole danger is great it may too. 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Can encourage the underground economy and give more economic power to criminal who! This allows greater freedom to all the players in the UK and overseas should use... Writes extensively and is a contributor and presenter on CPD conferences in the UK and.... Is little incentive for a firm to develop more efficient mechanisms U.S. economy has expanded enormously over the past,... Also be inadequately informed or technically incapable to solve complex problems government laws and regulations which prohibit certain and! And society as a whole St. Antony 's College, Oxford centres this! Uk electricity industry large organization today has to comply with several government regulations that are difficult to abolish natural. Would reduce pollution but could have adverse economic effects on business twenty experience! For British Telecom activities involved in the second case, government regulation of the efforts government... 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