Deregulation, Regulation and Regulatory Capture + other MICRO supply side policies

  • Regulation: this is the laws to restrict economic agents freedom of action in the market place
  • Deregulation is the opposite this is where there are cancellation of some laws to promote freedom of action in the market place.
  • Free Market economists say many regulations are unneccesary and can cause create burreacacy and red tape leading to higher business costs. It can also be a barrier to entry especially when protecting monopilistic power. There could also be the problem of regulatory  capture where the regulator that supposed to restrict actions of these powerful firms act in their interest rather than consumers. Like the government- some industries are important to the country in terms of international competitiveness so they would protect them instead of doing their job. 

Other Microeconomic Supply Side Policies

  • Public Private Partnership- This is where the partnerships between the private and public sectors to produce public goods
  • Private Finance initiative – a form of PPP where the private sector undertake most of the work.
  • Contractualisation- where public sector firms contract out services to the private sector. e.g. NHS contracting the catering service to Wimpy
  • Competitive Tendering – This is basically like a bid war for private firms where the public firm would see which firm will offer the best value of money for the service. 
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