1-Provide a well-explained definition of Industrial (Economic) Regulation. 2-Provide a well-supported explanation of how industrial regulation affects the market. Identify and explain the tools used...

Solution to Question 1
Industrial regulation refers to all those rules and policies of the government which are
aimed at regulating the industrial activities in the country. The government generally employs
egulatory bodies to monitor the product and price policy of the industries. They check the
emergence of monopoly powers in the markets along with controlling unethical practices,
undesirable competition and exploitation of consumers. The laws framed under the Industrial
egulation acts of the government play a very important role in the growth and prosperity of not
only the industrial sector but of the entire economy as a whole. The overall economic
development of an economy depends on the ability of its industrial sector to sustain high growth
ates. The industrial regulations help the central government to achieve the following objectives:
 Adequate growth and development of the industrial sector
 Regulating the nature, pattern and direction of this development
 To monitor the activities, performance and results of the industrial
undertakings in public interests.
There are several ways in which the government can regulate the industry to achieve the above
stated objectives. Following can be the categories of industrial regulations on the basis of the
purpose served by them:
 Regulations for Customer protection: the government aims to
strike a balance between business needs and consumer interests. Industries such as
anking and health insurance involve high degree of industrial regulation due to
increasing involvement of the government in these sectors. the government aims
at maximizing the accessibility of the common man to the services offered by
these industries
 Regulating monopolies: Monopoly market is always considered
inefficient in terms of the social welfare. The monopolists would attempt to
estrict the supply of his goods to maintain high market prices. Such practices are
considered derogatory for the overall development of the economy. in order to
check anticompetitive forces the government has framed many Antitrust laws to
monitor mergers and acquisitions in various industries and discard such practices
which threaten free competition in the 2markets
 Price regulations: the government directly or indirectly intervenes
to determine prices in the commodity markets by minimum support pricing laws
and price ceiling laws to protect the interests of the sellers and the buyers
espectively.
Thus the industrial regulation helps in creating checks and balances in a freely operating
market economy.
Solution to Question 2
Following is a detailed discussion on how various industrial regulations affect markets:
Price ceiling and floor pricing regulations
Price ceiling is the policy of the government to set a maximum limit to the market price
of a commodity at which it can be sold to the consumers to prevent undue exploitation of
consumers. The sellers, especially in a monopoly market, indulge in creating artificial scarcity
for their goods to raise prices. If the demand for the good is inelastic, the consumers suffer due to
high pricing. Such price ceiling norms will check such practices.
On the other hand the government also protects sellers against serious fall in prices due to
lukewarm demand or high competition in the markets. Setting a minimum support prices (MSP)
encourages to sellers to continue production. MSP is a like guaranty given by the government
who assures the seller that if the latter is unable to sell his produce in the market at a certain price
then they can sell the same to the government at the MSP. Minimum support price is setting
taking into consideration the cost structure of the industry and the some nominal level of profits
which are inevitable to survive in the industry. Thus these regulations protect the interests of the
uyers and the sellers by preventing exploitation due to undesirable demand or supply
conditions.
Antitrust and Competition laws
These laws check the rise of anticompetitive forces in the markets. They have a serious
impact on business practices and organization of U.S. industry (West Encyclopedia). The
ationale behind these laws is that free trade benefits the economy, businesses and the consumers
alike while monopolization would only serve the interests of the industries in the short run. In the
U.S., The Sherman Anti-Trust Act of 1890 forms the basis of antitrust laws. The job of
implementing and monitoring these laws is with the regulatory agencies such as the Federal
Trade Commission (FTC) and the U.S. Department of Justice's Antitrust Division. The
former check the violation of the Antitrust laws while the latter can legislate over the violators.
These agencies aim at...