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Industrial and Social Regulations

Industrial and Social Regulations
Introduction
Industrial regulation is the process of developing policies, principles, rules, or activities that guide an industry towards a desired direction. Over the years, industries in different economies of the world have been characterized by laissez-faire regulation. However, different governments have taken a key role in the drawing of industrial policies for the development purposes (Ball, McCulloch, Geringer, Minor & McNett, 2009).
Industrial and Social Regulations
The effects of economic regulations depend on various factors. These factors include the motive of regulation, the nature and structure of regulation instrument, industry economic characteristics, and political legal environment factors. In monopoly markets, economic regulations have two effects. First, regulations in energy and communication industries constrain prices thereby making a single firm to achieve economies of production. It also constrains the firm’s prices so that it neither makes insufficient profits nor excess profits. Additionally, the regulations ensure efficient pricing in monopoly markets. Uninformed regulating of monopoly markets may distort such markets by disrupting the firm’s input and encouraging inefficient pricing. Economic regulations may also alter technological changes within an industry. Moreover, regulation in the monopoly market may have an overall distribution of income among various parties within the market (Ball, McCulloch, Geringer, Minor & McNett, 2009).
Introduction of regulations in the multi-firm industry in terms of price, entry, and structure is causing some interest groups to gain at the expense of others. This is brought about by differences in the distribution of costs and benefits from such regulations. First, price and entry regulations in such markets may lead to lower, or higher prices. This strategy protects some firms that are not natural monopolies from the threat of rivalry and lower prices. The regulations contribute to discouraging new technologies rather than encouraging them. At the same time, price regulations in such markets protect consumers at the expense of firms.
Various markets structure entities are affected by the introduction of economic regulations in an industry. Barriers to entry and exit, which are entities of market structure, are affected by regulation. Horizontal or vertical differentiation of firms is also affected by the introduction of such regulations. The regulation also affects an important component of market structure, which is the market concentration of buyers and sellers.
Industry regulations affect barriers to entry or exit because they can be a source of market pricing inefficiency. The regulator may choose to regulate the industry in order to influence market concentration aimed at making the industry competitive and attractive. Social regulation is the protection of public interest such as health and safety, environment, and social cohesion by the government or regulators. Social regulations are majorly concerned with the production of goods and the effect of the production conditions for the general public. Social regulations affect employers who have to observe this regulation in the workplace to ensure the health and safety of employees. Social regulation entities include health and safety regulations, environmental regulations, and labeling and advertising regulations (Ball, McCulloch, Geringer, Minor & McNett, 2009).
Social regulations affect the environmental entity by requiring companies to regulate their emission and pollution of the environment to alleviate the detrimental effects of pollution. The regulation requires companies to develop various safety measures in the workplace to ensure healthy and safe working environment for the workers. In terms of quality products, social regulation may be introduced to induce an industry to produce quality products. This has its impact reflected in the increased cost of production within the industry, which may translate to an increase in the consumer price (Ball, McCulloch, Geringer, Minor & McNett, 2009).
Natural monopolies occur when one firm in an industry produces output and supplies it to the market at a lower price than a combination of firms. Natural monopolies are established when technical and legal barriers to entry into an industry exist. Legal barriers could be a result of economic regulation. Another aspect of natural monopolies is the cost advantages and sole access to strategic resources. According to economic theory, natural monopolies exist in industries that are characterized by decreasing long run average costs. This provides a justification for government regulation towards such industries. The antitrust laws in the United States were established by the federal and state government as a means of regulating corporations. There are four major pieces antitrust laws that regulate corporations within the U.S. They include agreement between competitors, restrictions on mergers, preventing monopoly powers, and contracts between buyers and sellers.
Three main industrial regulation commissions in the United States include Federal Communications Commission (FCC), the Federal Energy Regulatory Commission (FERC), and Securities and Exchanges Commission (SEC). The three commissions are independent agencies that administer regulation that control the communication, energy, and stock exchange activities in each industry. The commissions ensure that industry policies and regulations are strictly adhered to by industry players.
The Occupational Health and Safety Administration (OSHA) ensure that all employers follow regulations on health, safety, and risks in the workplace. Food and Drug Administration (FDA) regulates food and drug advertising, approves new drugs, and provides labeling and packaging requirements. On the other hand, National Highway and Traffic Safety Administration (NHTSA) set standards for automobiles and highways as well as monitoring risks. The Federal Aviation Administration (FAA) regulates and sets airline safety standards. Lastly, the Federal Trade Commission also regulates information in product advertisement at states and federal levels (Ball, McCulloch, Geringer, Minor & McNett, 2009).
Conclusion
As the world continues to globalize, many nations are regulating various industries to avoid negative consequences. The regulations are either economic or social. For each regulation, there are a number of positive and negative consequences.

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