Regulation

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Minimum price

Advantages

  • Can correct market failures that arise from externalities
  • Can control monopolies
  • Can punish firms for anti-competitive behaviour
  • Can protect the environment

Disadvantages

  • Hard to know which industries to regulate, and how to regulate them
  • Can be expensive to monitor firms to enforce regulation
  • Creates opportunity costs
  • Can be expensive to follow regulations

Evaluation

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