Explain how a legal cartel theory of regulation can be similar to a cartel
What will be an ideal response?
A cartel is formed when a group of competing firms make an agreement to cease competing. The firms either control the price of the product or divide the market geographically so each firm becomes a monopoly in their region. The legal cartel theory of regulation works in a similar way. Government regulations can move prices toward monopoly levels. This can encourage businesses to seek regulation if it believes the regulation will produce competition and raise prices.
You might also like to view...
In the above figure, point E represents the level of real GDP at which planned saving equals planned investment. At point C
A) changes in inventories cannot be determined. B) unused industrial capacity exists in the economy. C) unplanned inventories increase. D) unplanned inventories decrease.
Studies and experience suggest that labor and capital are highly complementary inputs to the production of pipe organs
Indicate whether the statement is true or false