Microeconomics
13th Edition
ISBN: 9781337617406
Author: Roger A. Arnold
Publisher: Cengage Learning
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Question
Chapter 12, Problem 8QP
To determine
Determine the major difference between capture theory of regulation and public theory of regulation.
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Compare and contrast the public-interest and special- interest theories of economic regulation. What is the capture theory of regulation?
What is regulatory capture? Explain and give an example of it.
What effect did the recession of 2007–2009 have on government regulation?
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- Which of the following is the correct name for the idea that certain firms prefer government regulation because regulation shields them from the pressures of competition and, in effect, guarantees them a regulated profit. a. The public interest theory of regulation. b. The structuralists’ theory of monopoly. c. The legal cartel theory of regulation. d. The public regulation theory of natural monopolyarrow_forwardWhat are the benefits of research in improvement of enforcement and regulation laws?arrow_forwardWhich of the following is not one of the three basic situations in which regulation is imposed? a. externalities b. natural monopoly c. price fixing d. imperfect informationarrow_forward
- To what extent would you consider the setting up of regulatory bodies an appropriate and effective solution to the principal-agent problem in markets where there is a natural monopoly?arrow_forwardQ2. Why is it important for companies to implement good internal control? What are the principles of internal control? Explain your answer.arrow_forwardGive typing answer with explanation and conclusion Which theory is most valid and why? capture theory of regulation or public choice theory of regulation?arrow_forward
- Given what you know about regulatory capture, can you describe a possible scenario where accusations of restrictive practices ends up limiting competition, rather than extending it?arrow_forwardWhich theory of regulation explains why the massive fraud of Bernie Madoff went undetected for years?arrow_forwardDefine market power, and then discuss the rationale for government regulation of firms with market power.arrow_forward
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