Government Regulation In The Economy:

market failure or missing markets, where the neoclassical tools of analysis do not lead to efficient allocation of resources. Apart from the above, there are several situations where market exists and lead to efficient allocation but in a highly inequitable manner. In such situations government intervention in the market is necessary. The concern in such cases is on the ground of equity rather than efficiency. The nature and extent of government intervention, however, varies across countries. Moreover, for the same country, the nature and extent of government regulation has undergone radical changes over time.

Issues of privatization of airline industry, power generation, foreign participation in retail trading, and many others, are highly debated not only in political circles but also at intellectual levels. We discuss in his unit some of the issues related to the rationale, instruments and effects of economic regulation.