Market vs. Regulation

Market vs. Regulation

Market vs. Regulation

Market vs. Regulation:There are many arguments in support and against government regulations. Free economy has been characterized by externalities and imperfections increasing need for regulation. Conversely, regulation creates imperfections in the markets and prevents market from clearing (Bush, 2006).

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Some sectors of the economy have unstable prices such as the agriculture sector. It is important for the government to control such sectors to enhance price stability. The government can tighten regulation during business cycles and mostly during the boom to reduce inflation and price instability.

Bush, P. G. (2006). The Economic Report of the President 2006. New Jersey: Cosimo, Inc.

Haufler, V. (2013). A Public Role for the Private Sector: Industry Self-Regulation in a Global
Economy. New York: Carnegie Endowment.

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