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.