8 Other research suggests the drag on economic growth could be twice that much, about $4 trillion ⦠It leads to standardization c. It can restrict communication d. It can be difficult to determine the optimal regulations Other uses of regulation should be looked at with suspicion. b. If firms get a lower price, there may be less incentive to supply the good, and the number of properties on the market declines. This has has both advantages and disadvantages when compared to a free market economy. The U.S. economy is essentially a free market economy â an economic market that is run by supply and demand â with some government regulation. The following are disadvantages to regulation: The goal of this oversight is to ensure that financial markets operate with a minimum of fraud and to provide a fair, transparent marketplace for investors and businesses alike. Deregulation brings both advantages and disadvantages to the consumers. While there is certainly no arguing that in the long run price controls can lead to major economic drawbacks, there is a brighter history in the ⦠  The Bush administration did not do so, allowing that reforms were needed but asserting that regulation would hobble U.S. companies' competitive advantage. They often stifle competition and the innovation that competition drives. a. Unlike the mostly benefits that deregulation has for businesses, there are some pitfalls of deregulation for the consumes. The disadvantage of max prices. The disadvantage is that it will lead to lower supply. Which of the following is NOT a disadvantage of regulation? This paper will discuss the advantages and disadvantages of price controls in regards to maximum and minimum price setting, as well as touch on the policies used to implement them. List of the Disadvantages of the Free Market Economy⦠Economic markets are fragile c. Regulation is costly d. There is an efficient market. The above-cited study in the Journal of Economic Growth compares time-series data on âthe extent of federal regulation in the United Statesâ to economic âoutput and the factors that produce it.â Per the study, this data indicates that regulations have âstrong and robust negative effectsâ on economic growth, and these ⦠In the latter, on account of their complex structure, regulation inevitably takes place at different levels, albeit within a ⦠In 2008, leaders at the G-20 summit asked the United States to increase regulation of hedge funds and other financial firms. A maximum price will also lead to a shortage â where demand will exceed supply; this leads to waiting lists. The aim of economic regulation is to create a system of incentives and penalties that aim to replicate the outcomes of competition in terms of consumer prices, quality and investment and puts the protection of consumersâ interests at its heart. In lieu of this patchwork regulatory framework, a country can choose to centralize regulation in one body, an approach with both advantages and disadvantages. As to economies of scale, remember how Apple ⦠It can be difficult to reverse b. Because regulatory impacts are diffuse and hard to measure, no estimates of the actual costs of regulation are completely reliable, but some researchers peg the total annual cost at more than $2 trillion. Economics, Brunel University, and St. Antony's College, Oxford. Thatâs why the Founding Fathers of the United States protected the concepts of capitalism with the Constitution and Bill of Rights. If we look at the advantages first, consumers benefit because they have more choices and hence, can affect the demand for a ⦠The main benefit of regulation is to force companies (and consumers) to internalize externalities -- a tritye truth going back to Pigou at least. 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