Economics Regulation and Market Structures Essay

Economics Regulation and Market Structures - Essay Example Economic regulation affects new companies who want to enter into a market. This reason why new competitors are affected is that they may not be able to enter into a market due to this form of regulation. Social regulation deals with exact social problems such as toxic waste, produce safety, employee safety, and prejudice (â€Å"Social Regulation†). Social regulation exists because in the 60s and 70s the government established regulatory agencies to handle a wide variety of social problems. The entities affected by social regulation include local businesses and citizens. Businesses may have to have a plan to deal with social problems, while citizens may have their rights restricted in terms of what they can purchase. A natural monopoly occurs when a firm can fulfil the market demand for a good or service at a cheaper price than all other competitors (â€Å"Natural Monopoly†). The reason why natural monopolies occur is because sometimes a market can only support one produ cer. According to economic theory, firms can attain monopolies because of unique raw materials, technology, or other factors. An example of a natural monopoly is the gas industry. It is uneconomical to build new infrastructure so just one set of infrastructure is built. This results in company having total control of the market (Pieterz). The antitrust laws attempt to order business to compete fairly.