Can Government Regulations Improve Competition?

Adam Smith answered this question in 1776 - "The wealth of nations".

Of course Government regulation is necessary otherwise your market won't be free and efficient for very long.

 

Like industries have the same regulations..

So they would be competing on a level playing field.

 

So Government Force makes markets Free and Efficient.....mmmmkay.....
.
.
.
.

 

People have been trying to use government to create competition for decades. Socialist Germany tried it, socialist Russia tried it. Every time it ended up having the opposite effect. These attempts led to a small group of favored businesses taking over.

 

I would say most regulation is negative to business, but I voted yes because it really depends. For example, a few of the anti-trust laws are pretty good, and although price fixing seems to me to be a bit hard to enforce, I'm glad it's against the law.

 

Exactly.

The problem is that Adam Smith would find a lot of self-professed defenders of the free market to be alien to the very concept of a truly free market.

 

Serfin:

The concept of a free market is not "Free, as in free beer". I am not "free" for example, to sell you baby formula containing poison or decaying meat - and believe me people have tried.

http://en.wikipedia.org/wiki/2008_Chinese_milk_scandal

http://www.usatoday.com/money/industries/food/2007-05-25-china-food-scandal_N.htm

The "Freedom" part of free markets is about creating a perfectly level playing field as far as possible in which all competitors can compete on an equal basis where there is no contrived advantage that reduces competition.

Regulation is necessary to limit rent seeking behaviour. This has been recognized since the Fourteenth century when the following market crimes were codified:

"Forestalling" - buying goods from a farmer before they had been placed in the open market for all to bid.

"Engrossing" - buying more than you need to try to corner the market.

"Regrating" - establishing a secondary market.

http://en.wikipedia.org/wiki/Engrossing_(law)

Competition law is there for a purpose. If you don't think that people have not looked at trying to corner the market in semiconductors or electronics etc. then think again.

 

rarely. Most of the time they decrease it.

 

Most of the time, yes, at least over smaller businesses.

 

Why? Like businesses would have like regulations.

It there are regulations on the care and processing of chickens or levels of emissions.. the rules would be the same for all.

 

If you have a chain of 4 restaurants, and have to start posting a calorie count, the cost per restaurant is higher than if you have a chain of 400 restaurants. The cost of the research would be the same, but it would be reduced by having more restaurants. It's not necessarily a level playing field.

 

The larger the business, the less the regulations would effect the bottom line. See my example about the restaurants and calorie regulations, for example.