Government regulation of economic and social activities permeates our lives. While regulation in many instances yields important public benefits,regulations often are imposed on individuals and organizations with too little thought or analysis of what is gained in comparison with the losses incurred in time, money, indecision, and productivity. Further, the growth of government involvement in the market system sometimes constrains our ability to achieve fundamental economic and social goals. According to the World Bank study, regulation on business varies widely around the world and less developed countries tend to regulate the most. a.Recommend how government regulations can be more effective.

Government regulation of economic and social activities permeates our lives. While regulation in many instances yields important public benefits,regulations often are imposed on individuals and organizations with too little thought or analysis of what is gained in comparison with the losses incurred in time, money, indecision, and productivity. Further, the growth of government involvement in the market system sometimes constrains our ability to achieve fundamental economic and social goals. According to the World Bank study, regulation on business varies widely around the world and less developed countries tend to regulate the most. a.Recommend how government regulations can be more effective.

Microeconomics: Principles & Policy

14th Edition

ISBN:9781337794992

Author:William J. Baumol, Alan S. Blinder, John L. Solow

Publisher:William J. Baumol, Alan S. Blinder, John L. Solow

Chapter15: The Shortcomings Of Free Markets

Section: Chapter Questions

Problem 4DQ

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Q.4 Government regulation of economic and social activities permeates our lives. While regulation in many instances yields important public benefits, regulations often are imposed on individuals and organizations with too little thought or analysis of what is gained in comparison with the losses incurred in time, money, indecision, and productivity. Further, the growth of government involvement in the market system sometimes constrains our ability to achieve fundamental economic and social goals. According to the World Bank study, regulation on business varies widely around the world and less developed countries tend to regulate the most. Recommend how government regulations can be more effective.
The government uses several tools to implement environmental regulation. For example, mandatory production standards are designed to prevent companies from damaging a public good such as air or water. Emission taxes that create financial incentives for industries to reduce known pollutants, for example, from oil and coal production, are used to reduce negative externalities. The government can also force a company that causes an environmental problem to clean it up, thus solving the free rider problem. Nevertheless, government regulation imposes costs on society: Higher production costs due to regulation may be passed on to households in the form of higher prices, which—if large enough—can harm the economy. Legislation and its enforcement increase the size and cost of government. What type of analysis does government engage in to protect public goods? Explain using economic terms. What is government goal?
The creation of knowledge is a public good. Because knowledge is a public good, profit-seeking firms tend to free-ride on the knowledge created by others and, as a result, devote too few resources to the creation of knowledge. How does the government correct for this apparent market failure?
The creation of knowledge is a public good. Because knowledge is a public good, profit-seeking firms tend to free-ride on the knowledge created by others and, as a result, devote too few resources to the creation of knowledge. How does the U.S. government correct for this apparent market failure?
Please provide a brief comparison of the advantages and disadvantages of market capitalism relative to market socialism.
Demonstrate a willingness to critically assess the impact of economic policies on economic efficiency within the confines of a market system
a) Briefly explain the difference between a trade secret and a patent.b) Why might one prefer a trade secret to a patent?c) Are trade secrets and patents socially efficient? Explain.
Suppose Fischer Pond is a common-property resource—anyone can fish without having to pay for access. Locke Lake is privately owned—people who want to fish must purchase one of a limited number of permits from the lake's owner each season. According to the incentives that private ownership creates, which of the following would you expect to happen? Check all that apply. The owner of Locke Lake is likely to keep the lake clean and unpolluted. The owner of Locke Lake is likely to limit the number of fishing permits in order to maintain a plentiful stock of fish. Fischer Pond is less likely to experience a dwindling stock of fish each season.
Identify a newspaper article that illustrates a market failure in Barbados. Ensure that you provide a screenshot of the article in your submission. NOTE: Only the following market failures should be examined: public good, asymmetric information, positive or negative externality. Suggest a relevant government policy that would yield the efficient outcome and carefully explain the process through which the implementation of the government policy will lead to the optimal outcome. How will the imposition of the chosen government policy impact consumersurplus, producer surplus and total surplus in this scenario?
Typically this kind of economic activity results in environmental harm through production and consumption externalities. When a country such as Econ Land manages to break the link between economic activity and environmental harm, it is known as ["decoupling", "uncoupling"] . Whether Econ Land has truly broken this link or not depends on the amount of ["export pollution", "import pollution"] they are responsible for, pollution in other countries resulting from the production of products consumed in the country of Econ Land.
Environmental regulation was discussed for cases in which the market is unable to price risk correctly. In those cases, regulatory agencies are often tasked with evaluating risk and with administrating any regulations imposed. What does Public Choice Theory suggest might be the outcome of these bureaucratic processes in terms of the optimal level of regulation? Why?
Consider two ways of protecting elephants from poachers in African countries. In one approach, the government sets up enormous national parks that have sufficient habitat for elephants to thrive and forbids all local people to enter the parks or to injure either the elephants or their habitat in any way. In a second approach, the government sets up national parks and designates 10 villages around the edges of the park as official tourist centers that become places where tourists can stay and bases for guided tours inside the national park. Consider the different incentives of local villagers—who often are very poor—in each of these plans. Which plan seems more likely to help the elephant population?