Economics of Regulation

Economics of regulation studies how government rules and policies impact markets and society. Regulations aim to correct market failures, protect consumers, ensure safety, and promote social goals. However, they also create costs, such as compliance expenses for businesses or reduced competition. Economists analyze how regulations influence prices, quality, innovation, and resource allocation to find a balance—ensuring benefits outweigh costs. Ultimately, it’s about designing policies that achieve desired social outcomes efficiently without undue burden on economic activities.