Is regulation really necessary, or can all the benefits claimed for it Essay

Is regulation really necessary, or can all the benefits claimed for it be achieved through the promotion of competition alone - Essay Example National governments may regulate for a variety of reasons, including re-election and influence from economically powerful houses (Baldwin, Cave, and Lodge, 2012:16). Governments may also technically justify regulations, thus the general assumption that the regulation was in the context of public interest. However, most rationales presented are instances of market failure, thus regulation is initiated, as the uncontrollable market will produce results or behaviors against public interest. Other scenarios may present issues of market absence, or an ineffective market. One of the advancing and developing industries in the global economy is information and communication technology (ICT). The rapid growth of ICT presents concern over regulation and the possibilities of eliminating market failures, thus the rise of such regulatory bodies like the Federal Communication Commission in the US. In summary, regulation is better than competition in safeguarding public interest. Among the theory favoring regulation, include public interest theory, private interest theory, and interest groups theory. According to the public interest theory as argued by Baldwin, Cave, and Lodge, in their 2012 publication, the rationale behind regulation is to benefit and protect the public at large. The theory capitalizes on potential market failures such as monopolistic powers, externalities, asymmetric information, and strategic behaviors. It thus creates the ideology that consumers need protection from market failures and business abuses, with the assumption that regulation serves the best interests of the public through restricting potentially harmful business behaviors (Baldwin, Cave, and Lodge, 2012:164). The interest groups theory suggests that there is need for regulation for the interests of stakeholders, while the private interest theory seeks to safeguard the interest of private inte rest groups in regulation.