Short answers about Introduction to Political Economy - Essay ExampleIn a bid to take over the market, firms enhance internal efficiency, adopt new technologies, invest in innovations, and reduce inefficiency on managerial level (Office of Fair Trading 6).In the economic systems that are based on free markets, the latter are major determinants of market outcomes. In the situation when the market failure occurs because of the fact that this market’s quality, price, or quantity do not meet established social welfare norms, economic regulation is used. Its major aim is to prevent market failure. It is desirable since it prevents the market failure (Jacobs & Rapoport 353).The major difference between capture theory and public interest theory is that the latter believes that regulation is inherently effective: it leads to the society getting better off.
