What is one reason existing firms might lobby the government to increase regulation in their industry?
A) It increases entry and exit costs, thereby reducing producer surplus to existing firms.
B) It increases entry and exit costs, thereby potentially increasing producer surplus to existing firms.
C) It increases entry and exit costs, but has no impact on producer surplus.
D) Firms cannot be trusted to treat their customers fairly and ethically.

Question

Quizplus · Accepted Answer

Existing firms may lobby the government to increase regulation in their industry to increase entry and exit costs for new competitors, which helps to reduce competition and potentially increase producer surplus for existing firms.

What Is One Reason Existing Firms Might Lobby the Government