Regulations and Market Structures Essay

1343 Words6 Pages
Running head: REGULATIONS AND MARKET STRUCTURES Relationship between Regulation and Market Structures Rajenna Combess Western Governors University EGT1: Economics & Glob Bus Apps Task 3 03/19/2012 A. Define industrial (i.e., economic) regulation Industrial regulation is the government regulation of an entire industry with the objective of keeping close eye on the industry prices and products to ensure that it does not create a monopoly and take advantage of consumers. Economic regulation is a form of government regulation designed to influence the behavior of industries and individuals in the private sector (McConnell & Brue, 2008). Why industrial regulation exists Industrial regulation exists to ensure that natural monopolies do not charge consumers high prices that in turn affect the entire society. The government regulates to create rates that will provide the entity with normal profits How industrial regulation affects the market Industrial regulation affects the market through its regulation of natural monopolies protecting market consumers from high prices. The industrial regulations set a fair rate that allows the monopolies to obtain fair profits and the enterprises obtaining fair returns (McConnell & Brue, 2008). Oligopoly is the other market structure affected by social regulation because it is large when compared to the overall market, and the factor of interdependence between firms. The entities affected by industrial regulation in terms of market structure Industry regulation affects the monopolies through perfect competition; with monopolies new entrants are not allowed in the industry, the monopoly firm remaining the only option for consumers. Perfect competitive; regulatory rules promotes efficient and innovation performance. Entry restrictions lead to an increase in demand which increases prices. In addition to

More about Regulations and Market Structures Essay

Open Document