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Government Regulation Impairs the Efficiency

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Do you think government regulation impairs the efficiency of a firm? Then how do the highly regulated economics of the European Union compete so well against the United States, or do they?

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Solution Summary

The solution explains whether the OTA thinks that government regulation impairs the efficiency of a firm.

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Do you think government regulation impairs the efficiency of a firm?

-- Actually, government regulation to an extent improves the efficiency of a firm, because there is strict regulation that the company must follow. Sarbanes-Oxley is a good example. In this country, firms must comply with the SOX Act. It was designed to ensure that there are proper controls in place, and that firms can't simply do as they wish, and report their financial data as they choose to do so, which would put the investors and the economy at risk, if and when the firm folds. Government regulation is in many cases designed to control the actions of firms, so that the firms must follow certain guidelines that are designed to protect the stakeholders, protect the economy, and that encourage fair trade and fair practices. ...

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