Regulation, Antitrust, Public Goods, and Public Choice

Question 1

Discuss the rationale for government regulation of firms with market power. Is regulation in the consumer's interest or in the producer's interest and how might this control special interest groups?

Question 2

There is a tendency to turn problems of market failure over to the government. However, a representative democracy has failings of its own. Should we always expect government to perform better than the private sector in solving economic problems?

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... it isn't a case of a company beating its competitors, there simply are no competitors, once a landline phone company was set up, there were immediate barriers to entry for its competitors (the cost of creating the network and the fact that it is unlikely you'd get your first subscribers to your network unless you had acces to your competitors subscribers). In some sense, once the one company is established, no one would bother to compete with it. The government then can come in and try to regulate price in such a way as allowing for some profit but preventing the company from abusing its position.

More interestingly are the cases related to technology. Microsoft has been fined and ordered to stop some of its practices to prevent it from destroying its competition. Once Windows became the standard, it was the rails on top of which all software had to ...