Question

It can be argued that over-regulation is harming U.S. companies and that is a problem for international competition. Explore three key points of the problem.

Answer 1

Government over-regulation negatively impacts the ability of U.S. companies to compete in an international marketplace. Over-regulation impacts innovation, revenue, jobs, and the ability to produce international competitive products. Over-regulation is harming U.S. companies in the following ways:

1) Regulations usually act as suppression on competition thus leading to create a monopoly or quasi-monopolistic outcomes in the affected industries. To the extent that regulations impose costs that result few firms to discourage entry into the market by entrepreneurial start ups or to exit the market

2) For small U.S. companies, navigating the complexities of the federal tax code is an extra burden than the money they lose to the government. U.S. companies have higher costs, and due it will receive less business and may reduce employees to cover cost.

3) Whether it be environmental or land-use regulations, labor market regulations, health care mandates, marketing and advertising regulations, product manufacturing regulations, , regulations on financial and banking, business firms in the affected industry will consider these regulatory expenses merely as additional cost of doing business, just like tax.