Public Policy, Ist Edition by Pearson

CHAPTER 13

Public Policy – Regulatory Reforms

1. NEED FOR REGULATIONS IN THE ECONOMY

According to the classical school of thought, the market functions efficiently and ensures consumer value. However, in practice, markets fail to ensure maximum social welfare because of the concentration of market power in the hands of a few and externalities. Hence, regulating the market participants to ensure fair practices became necessary.

The need for regulations and regulatory institutions has increased globally since the 1970s when many economies embraced neo-liberal economic policies and redefined the State’s role in the economy. Countries have opened up more sectors for private participation; in many countries, several sectors were reserved for public ...