Business Environment, 1st Edition by Pearson

Chapter 12: The Role of Public Policies in Governing Business | 139 |

Companies hire lawyers, public relation offi cers, liaison offi cers

to monitor and manage the interaction with the government.

(ii) Justifi cation of government regulation

(a) Market failure: Using regulation to add the social costs of

a product that are not otherwise demanded in the market.

(b) Ethical failure: Regulation ensures fairness and justice,

and adds this cost to the product.

(c) Stakeholder demands: Special interest groups lobby for

more government intervention in environmental conserva-

tion, consumer protection, etc.

(d) Public reaction: Communication of national events has

made most “accidents” more visible and less acceptable.

(e) Political advocacy: ...