Chapter 5: Government Regulation of Competition and Prices

Regulation Regulation by government has occurred primarily to protect one group from the improper conduct of another group. Until the middle third of this century, regulation of business was primarily directed at protecting competitors from misconduct of other competitors. Beginning with the middle third of this century, regulation expanded in the interest of protecting consumers.

Government Regulation of Business Chapter 5 Government Regulation of Business Require licenses for certain businesses Set health and purity standards for cosmetics, food and drugs Prohibit false advertising Regulation of Production, Distribution, and Financing Create a national currency and maintain Federal Reserve Bank Compete with private enterprises Prevent unfair competition and protect business identities (trademarks, etc.) Regulate interstate transportation & communication Establish standards for weights & measures 1

Acts Related to Regulation The Sherman Antitrust Act prohibits conspiracies in restraint of trade and the monopolization of trade. The Clayton Act prohibits mergers or the acquisition of the assets of another corporation when this conduct would tend to lessen competition or give rise to a monopoly.