Authors libby rittenberg 875

often disagree about which, if any, consumer protection regulations are warranted, they tend to agree that market incentives ought to be used when appropriate and that the most cost-effective policies should be pursued KEY TAKEAWAYS  Federal, state, and local governments regulate the activities of firms and consumers  The public interest theory of regulation asserts that regulatory efforts act to move markets closer to their efficient solutions  The public choice theory of regulation argues that regulatory efforts serve private interests, not the public interest  Consumer protection efforts may sometimes be useful, but they tend to produce behavioral responses that often negate the effort at protection  Deregulation efforts through the 1990s generally produced large gains in consumer welfare, though demand for more regulation is rising in certain areas, especially finance TRY IT! The deregulation of the airline industry has generally led to lower fares and increased quantities produced Use the model of demand and supply to show this change What has happened to consumer surplus in the market? (Hint: You may want to refer back to the earlier discussion of consumer surplus.) Attributed to Libby Rittenberg and Timothy Tregarthen Saylor URL: http://www.saylor.org/books/ Saylor.org 875