How does antitrust policy and regulation affect economic welfare? Antitrust policies and regulations placed by the government of the United States are geared for the competitive process. Several rulings on major companies have been made in order to have a set of guidelines of when a government intervention is needed. Government intervention acts like a regulator with goal of improving economic welfare, well at least in theory. By implementing antitrust policies governments decrease market powers of monopolies. For example, antitrust policies are a way to control inefficiency that a monopoly is creating in a market, by forcing competition.
In contrast, to restricting company’s ability to monopolize a market, the government can imposed copyrights and/patents that would protect a company’s exclusivity giving the company more control over the market. Government can also place regulations or limits on a business or consumers, for example, by making activities legal or illegal. Although these government interventions are seen as positive, there is no real way to determine to know whether the benefits of those laws results in lower prices and higher output. What is the goal of taxation?
The general goal of taxation is to raise revenue for the government’s practices and activities. In depth, according to the textbook, there are two goals for the government to place taxes on a company or consumers. The first one as previous stated is to raise revenue and this type would be the most beneficial when the supply is inelastic. The second goal is to change a consumer or company’s behavior in the market and it is most effective with supply is elastic. How economic policies are affected by politics? How do politics make a positive or negative contribution to economic policy?
A board rule is observed when speaking of politics and its affect on the economy called the general rule of political economy. This rule holds that policies tend to support smaller groups instead of large groups because the smaller groups are usually more efficient in urging their causes and the larger groups are not. Promoting smaller groups policies not only affects the smaller but the larger group as well. Programs support by these policies is enforced by the government, for example, through regulation and setting interest rates.
In world of politics, consumers and small groups that lobby their cause only look after their interests, therefore a politician may act towards interests for a specific group in order to gain their support, but this may or may not be beneficial to the overall welfare of the economy. Alternatively, just because the policies urged on by smaller groups does not mean that it would contribute to the overall welfare of the economy. The positive or negative would need to be examined more in depth to specifics and the realities of our modern world are more complex.