Under what market structures is government regulation of prices justified? Explain

Marketing Jan 12, 2021

Under what market structures is government regulation of prices justified? Explain.

Expert Solution

Usually, the type of market structure in which government regulation is justified is one that has a lack of competition and an excessive amount of power (e.g. a market with a single player that charges prices at 5,000% above cost and uses the profit to pay large bonuses to management).

Therefore the type of market structure would include a monopoly or an oligopoly where there is evidence of collusion between the main suppliers to keep prices high.

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