Question

The public interest view of regulation suggests that regulation exists when the characteristics of a market differ significantly from those of a competitive market, characterized by all of the following except A. an absence of spillovers (i.e., all costs are internalized to sellers or buyers). B. large numbers of sellers with relatively low market shares and low cost of entry by new firms. C. low-cost information to firms with respect to the cost of production and to consumers concerning prices and quality. D. small numbers of sellers with relatively high market shares and high cost of entry by new firms.

Answer 1

ANS) -- For the public interest view of regulation there is a theory and that theory explains the government involvement in market and related serving rules which are the reasons for lack of success in market.This theory is mainly helping to increase the general welfare,other then the interests of big businesses.

-- The major problems of the regulation are the control of the market capacity and non similarity among the government and the entrepreneur.And there are mainly 3 ways to solve this problem, they are treating the aggressive pressure,searching the information about the entrepreneur and the market and also by applying motivating regulation techniques.

-- The various regulators use the above 3 ways or may be the mixing of these ways and it is based on the nations needs,value of searching for information and also ability for the struggling.

-- The regulators are mainly aiming on the problems of cost,motivation and market shape.And not only that but also the service value and to gain the various social objectives and these are totally called as the non price issues.

-- The environmental influence of the usefulness service is externality,then a profit increasing operator will be giving funds for the environment preservation.And at the time when the undivided attention between the operator and government had not happened then the government will see it most favorable time to give motivation for the entrepreneurs to achieve the government needs.

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