2 Protection Through regulation or government intervention in a market Examples-Producers must provide information-Laws: Zoning laws, etc.-Patents & copyright-Federal & state agenciesFDA, OSHA, EPA, etc.
3 Downside of Regulation Costly to implement requirementsSlows growth b/c cuts into profitsLimits competitionIncrease in government spending***Leads to deregulation or removal of some government controls
4 What is a Public Good?A shared good/service for which it would be impractical to make consumers pay individually & to exclude nonpayersExamples – roads and damsCharacteristics-Collect taxes: simplifies funding-Should be available to all: roads, parks-Numerous users does not reduce benefit
5 How to be a public good?Cost less than if provided by a private companyTotal benefits to society greater than total cost
6 Market FailureA situation in which the market does not distribute resources efficientlyExamples:a. Free riders – Benefits from the good eventhough didn’t pay for itb. Private company building roads
7 Safety NetFederal, state & local government programs to help raise people’s standard of livingExamples-Social Security-Unemployment insurance-Workers’ compensation-Medicare/Medicaid