Regulation: Protecting People from the Market

Regulation: Protecting People from the Market

Introduction
There are advantages and disadvantages to government regulation on a local, state, or federal level. Read the content below to learn more about how government regulations can benefit groups such as consumers, while also creating challenges like barriers to entry in a market.
Antitrust policies are primarily concerned with limiting the accumulation and use of market power. Government regulation is used to control the choices of private firms or individuals. Regulation may constrain the freedom of firms to enter or exit markets, to establish prices, to determine product design and safety, and to make other business decisions. It may also limit the choices made by individuals.
In general terms, there are two types of regulatory agencies. One group attempts to protect consumers by limiting the possible abuse of market power by firms. The other attempts to influence business decisions that affect consumer and worker safety. Regulation is carried out by more than 50 federal agencies that interpret the applicable laws and apply them in the specific situations they find in real-world markets. Table 2.2 lists some of the major federal regulatory agencies, many of which are duplicated at the state level. The other person tries to change business decisions that affect the safety of customers and workers. More than 50 federal agencies are in charge of regulation. These agencies interpret the laws that apply and put them into practice in real-world markets. Some of the most important federal regulatory agencies are listed in Table 2.2. Many of these agencies also exist at the state level.
Table 2.2 Selected Federal Regulatory Agencies and Their Missions
Financial Markets

Federal Reserve Board

Regulates banks and other financial institutions

Federal Deposit Insurance Corporation

Regulates and insures banks and other financial institutions

Securities and Exchange Commission

Regulates and requires full disclosure in the securities (stock) markets

Commodity Futures Trading Commission

Regulates trading in future markets

Product Markets

Department of Justice, Antitrust Division

Enforces antitrust laws

Federal Communications Commission

Regulates broadcasting and telephone industries

Federal Maritime Commission

Regulates international shipping

Surface Transportation Board

Regulates railroads, trucking, and noncontiguous domestic water transportation

Federal Energy Regulatory Commission

Regulates pipelines

Health and Safety

Occupational Health and Safety Administration

Regulates health and safety in the workplace

National Highway Traffic Safety Administration

Regulates and sets standards for motor vehicles

Federal Aviation Administration

Regulates air and traffic aviation safety

Food and Drug Administration

Regulates food and drug producers; emphasis on purity, labeling, and product safety

Consumer Product Safety Commission

Regulates product design and labeling to reduce risk of consumer injury

Energy and the Environment

Environmental Protection Agency

Sets standards for air, water, toxic waste, and noise pollution

Department of Energy

Sets national energy policy

Nuclear Regulatory Commission

Regulates nuclear power plants

Corps of Engineers

Sets policies on construction near rivers, harbors, and waterways

Labor Markets

Equal Employment Opportunity Commission

Enforces anti-discrimination laws in the workplace

National Labor Relations Board

Enforces rules and regulations governing contract bargaining and labor relations between companies and unions

Note. Adapted from “Applications of the Production Possibilities Model,” by Rittenberg, 2011, Principles of Economics, Chapter 2, Section 3. Copyright 2010 Flat World Knowledge, Inc.