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Governmental regulation of the marketplace

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Should government create conditions of pure competition for all business? In your answer consider water companies, restaurants, and airlines.

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For certain industries pure competiton is not rational. This is often true when the industry requires a large upfront investment, so the additional cost to serve an addition customer is neglible in comparison. Thus a company already established will be able to give customers a much better price than one that is trying to recoop the loss of the intitial investment. Water companies are a good example of this.

Furthermore "economy of scale" ...

Solution Summary

Considerations related to governmental regulation of the marketplace