Regulation is appropriate if

Question

Quizplus · Accepted Answer

Regulation is appropriate when there is a market failure, such as externalities or monopolies, that cannot be corrected by the market alone. However, regulation also comes with costs such as administrative expenses and reduced innovation. Therefore, regulation should only be implemented if the benefits of correcting the market failure outweigh the costs. If government failure exists or if the costs of regulation outweigh the benefits, then regulation is not appropriate.

Regulation Is Appropriate If