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Reasons for Government to Regulate Business

Why government sometimes regulates business
How government regulates business ?
The government intervenes because there are flaws in the market
Franklin D Roosevelt always thought that the government should intervene To be sure that markets function correctly
Flaws in the market:
1. natural monopoly- When A certain business managed to acquire all of the resources for that business search that other businesses cannot get those resources and therefore cannot establish their own business.
The government tries to have free competition and tries to restrict the occurrence of natural monopolies
2. Destructive competition is one companies engage in Practices that are designed to destroy the competition
3. Externality (a side effect or consequence of an industrial or commercial activity that affects other parties without this being reflected in the cost of the goods or services involved, such as the pollination of surrounding crops by bees kept for honey.) Could have good or bad externalities. Example : an empty lot in a neighborhood someone wants to build a retirement home bad externality more traffic to that area Ambulances and noise all the time but if they put a shipping center their with coffee shops and restaurants good externality The people around won’t have to leave their homes to get there.
4. Inadequate information. Example: years ago you would go to a grocery store and see three different types of peanut butter you don’t know what’s the difference if there’s chemicals if ones are organic … as a consumer you would not know which peanut butter is best
So government intervenes to make sure that There’s a corporate social responsibility so that customers know what ingredients are in their products Basically any information that a customer would need to make sure know about their products and are able to tell the difference between products