Regulation might not increase total surplus because

Question

Quizplus · Accepted Answer

All of the given options are possible reasons why regulation might not increase total surplus. The costs of implementing and enforcing the regulation might be higher than the benefits it provides, making it ineffective. In addition, regulators may not have enough information about the industry to set prices correctly, leading to market inefficiencies. Lastly, regulators may develop close ties with the industry they are supposed to regulate, leading to a conflict of interest and reduced effectiveness.

Regulation Might Not Increase Total Surplus Because