Regulatory Economics

Regulatory economics, within the context of industrial organization, studies how government regulations affect market structures, firm behavior, and consumer welfare. It examines the balance between ensuring fair competition and protecting consumers while promoting innovation. Regulators may set rules for pricing, entry barriers, and quality standards to prevent monopolies and encourage healthy competition. By understanding these dynamics, policymakers aim to create an environment that supports economic efficiency and social welfare, ensuring that markets function effectively without excessive dominance by a few firms.