Question

Do you think price regulation is needed in India? Give two arguments in favor of price regulation.

Answer 1

Regulatory compliance costs, learning about and coping with often complex rules, along with whatever direct costs each specific regulation imposes on the targeted firms in the regulated market, merely act as a tax on the affected industry.
Regulations often act as a suppression on competition, creating monopolistic or quasi-monopolistic outcomes in the affected industries. 
In many circumstances, depending on the size and position of the firms within their industry, businesses crave regulation. From our earliest history of state and federal regulationsbeginning in the 1880s, regulations have been about placating the interests of existing firms who feel threatened by new rivals providing lower-priced and more innovative products. 

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