Government intervention and regulation

Introduction

The government can also take specific measures to regulate businesses through competition policies, ecological policies and business assistance policies.

Competition Policies

Competition policies ensure that market failures are avoided. Government particularly seek to regulate private markets. Competition policies are introduced to:

  • Reduce company domination (Monopolies)
  • Control prices and profits
  • Investigate mergers (Against the public interest)
  • Investigate restrictive practices (Prevent development of anti-competitive practices)

 Green Policies

Green (Ecological) policies may not directly benefit the organisation but rather the environment and society. They include external environmental costs occurring from production or consumption. The Government policies include:

  • Polluter pays principle (Tax on environmental damaging practices)
  • Subsidies (Encourage reducing pollution)
  • Legislation (Regulation governing waste disposal and emissions)

 Business Assistance Policies

The Government also has aid policies to assist businesses in the economy in particular small businesses. These include:

  • Grants for depressed areas /official aid schemes
  • Enterprise initiatives