Government Intervention Negative Externalities...

Government intervention in the economy has consistently been a sensitive subject. When it comes to regulating of the economy the implementers must find the balance between the cost of regulation and the benefits. Some are more essential than others, but generally all these regulations are designed for different situations. There are several types of regulations that seek to negate negative effects of producers and benefit the consumer: negative externality regulation, factual information regulation, and unnatural monopoly regulation. Negative externality regulation aims to limit the negative effects of a particular action that might benefit one individual rather than the whole community. The rationale between this type of regulation is that with any production of a good there are bound to be some negative externality; where there is a regulation to enforce we can see the reduction, taxation, or elimination of this externality. In a totally efficient market negative externalities are usually ignored therefore increasing the social cost and there is a competitive reason for this. Firms may not want to cut cost and pollute more, but if they don’t they are at a competitive disadvantage. This is when the market can be too free and too competitive. Negative externality regulation is meant to include the social cost in the form of a tax, fee, fine, etc. (Ulbrich, 116). This will increase the total cost, but we must also compare it to the social cost and see if it is actuallyShow MoreRelatedAirline Industry in Hong Kong8396 Words   |  34 Pagesfollowings,  6 ¦1 Supply and demand  ¨C regional and global  6 ¦1 Technological advancement leading to economies of supply  ¨C reduction in production cost  6 ¦1 Profit maximization  ¨C price discrimination vital for the Airlines Industry  6 ¦1 Government intervention  ¨C deregulation and liberalization.  6 ¦1 Trends  ¨C formation of alliances Along the process, we have adopted the principles from both microeconomics and macroeconomics in evaluating the influence to the internal (the firms) and the externalRead MoreOrganisational Theory230255 Words   |  922 Pagesorganizational forms for a new millennium? Introduction What is postmodernism? Is postmodernism anything new? The history Post-industrialism and the information society The virtual organization Neo-fordism, flexible specialization and post-fordism The regulation school Institutionalist school The ‘managerialist’ school The flexible firm – critique Postmodern organizations – the work of Stewart Clegg and Paul Heydebrand Conclusions 198 198 200 202 205 206 211 213 215 217 220 225 227 234 Chapter 6