Explain Why Government Regulation Is Needed, Citing the Major Reasons for Government Involvement in a Market Economy

Explain why government regulation is needed, citing the major reasons for government involvement in a market economy.

In the beginning there was no intention for the government to have a hand in business. The government wanted businesses to act on their own best interests without any involvement from the government. Regulation was brought about to enhance the public and take care of those that have lost or investigate those who have cheated. For many years there was no government regulation and as time progressed the need for it became apparent. Regulation has a lot of costs and a lot of benefits. The government likes to keep them efficient by making sure the benefits of them outweigh the cost. It isn’t cheap to have these regulations in place but it is what is needed to make sure that companies are doing the right things. The following are roles of government: protecting business property and enforcing business contracts, setting and collecting taxes. The government would provide fire, police and military protection under protecting business property. The government would issues trademarks to businesses to protect their products, copyrights to artists and writers to protect creations, and patents to inventors to give them control of their inventions. Within the soft drink industry government regulation is much needed due to the fact that child obesity is on the rise. The role of government in business has changed and evolved since the country was born. The government is involved in business to provide public goods; to protect public health and welfare; to stabilize the economy; to protect businesses, consumers, investors, and competition; to conserve the environment; to regulate working conditions; and to protect business property. Both state and federal laws govern mergers and acquisitions. State laws set the procedures for the approval of mergers and establish judicial oversight for the terms of mergers to ensure shareholders of the targeted company receive fair value (McGuigan 2011). The federal government oversees corporate consolidations to ensure that the combined size of the new corporation does not have such monopolistic power as to be unlawful under the Sherman Antitrust Act. The federal government also regulates tender offers through the William Act, which requires anyone purchasing more than 5 percent of a company’s shares to identify themselves and make certain public disclosures (McGuigan 2011).

Justify the rationale for the intervention of government in the market process in the U.S.

Market processes are the most complex process in terms of mergers and acquisitions in the US; this is the reason why the government focuses more on mergers and acquisitions within the market process. The government could also intervene in order to regulate the resources and allocate the right amount of resources for the improvement of economies and social welfare.

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