Regulation Flashcards
1
Q
What is regulation
A
A rule or law enacted by the government that must be followed by economic agents to encourage a change in behaviour
2
Q
What type of approach is regulation? Why?
A
Non-market based approach
Doesn’t work through the price mechanism
3
Q
What is regulation not reliant on
A
Price elasticity of demand
4
Q
Regulation examples
A
Bans
Limits
Caps
Compulsory
Innovative regulations
5
Q
What does there have to be for regulation to work
A
Enforcement
Punishment
6
Q
How will regulations solve market failure
A
Make firms change behaviour in the free market without working in the free market
7
Q
What will the end result of regulation be
A
Allocative efficiency
Welfare gain
8
Q
Evaluation points for regulation
A
Cost
Setting the right regulation
Black markets
Unintended consequences
Equity
