Question

Which strategy is better for ensuring sustainability: Government Regulation or Market Self-Regulation? Give example.

Answer 1

in achieving sustainability—lock-in or path dependency caused by the failure of firms to envision, design, and implement policies that would simultaneously achieve social, environmental, and economic goals. Policy interventions are needed to increase not only capacity, but also willingness, opportunity, and motivation on the part of incumbents and new entrants to change the present industrial state into a more sustainable one. Structural interventions at all levels of governance are needed to foster breakthrough technological innovations. These structural interventions should integrate environmental, health, and safety decision-making with decision-making on employment and trade policies. Other interventions include specific legal and policy instruments that will encourage and even force such innovations in a manner that will achieve environmental, economic, and social objectives in a mutually reinforcing way.

Who is likely to win and who is likely to lose from an industrial transformation is also a question that should be considered. Persons, firms, and governments who benefit from maintaining the status quo or continuing its trends can well drive us deeper into unsustainability. They create a major source of lock-in and path dependence—entrenched economic and political interests that gain from the present system and advancement of its current trends through the exercise of monopoly power, financial privilege and control, advertising, and regulatory and political capture, even though the citizens as a whole in a nation may not benefit, or may even be harmed. Further, they stand in the way of different actors who may provide better pathways. To address these concerns requires a different focus of (mostly) legal interventions than those directed towards enhancing the capacity to change through a deepening and integration of interventions that open up the problem space. Policies are needed to ‘open up the participatory and political space.’ These include using the power of legal compulsion through law and legal institutions, antitrust law, legal changes in the chartering of corporations, the limiting of unjustified profiteering, the restraint of advertising, the cessation of rewarding excessive consumption of both materials and energy, subsidizing the wrong kind of production and provision of services, countering and punishing financial corruption and fraud, and fair employment and wage policies. Example - goverment want to control the inflation or controlling inflation is a necessary need of the economy . So in such case government intervention is necessary , we cannot wait for market self regulations .

Such interventions ‘open up the participatory and political space’ and are different from other interventions opening up the problem space for envisioning, designing, and implementing technological innovations that achieve social, environmental, and economic goals in mutually reinforcing ways—but they can be of equal importance. Finally, it should be clear that we are advocating stronger, not bigger government. Integrating governmental policies and initiatives could very well result in smaller government than one that operates in a fragmented way. Hence Government regulations are better than market self regulations .