Question

Although governments at all levels sometimes act to prevent some individuals from competing with others, the federal government is probably the most active in this role, state governments are less active, and local governments are the least active. Can you explain this pattern?

Answer 1

All Governments of each country has its own responsibility of monitoring the condition of each individuals competing with all type of market forces like perfect competition, imperfect competition, monopoly and oligopoly. But in the US government system, it follows the limited government rules and regulations. Limited government has the feature of free market economy. The free economy of government will not have any issue of unemployment, low wages, production restrictions and other problems which relates to the production of goods and services of all the firms.

The Limited government procedures of federal government provides all freedom of rights to all the individuals in every aspect of economic situation. As the part of the procedures, government reduced the tax from 35% to 25% in order to increase the savings out of their disposable income as well as purchasing power of every people who wants to buy the goods and services. But the state governments and local governments does not have such active powers to maintain the consistency of preventing individuals from competitng with others.

Local and State Governments have less legislative power to categorize the market situation. Free market economy does not fetched any change the effects of free trade economy. The taste and preferences differs from state to state. So manufacturers has been forced to fix the price of the products of goods and services from each state. So Monopoly rules applies here. So local and state governments have least power to solve the problem of monopoly firms.