Question

what role does government regulation serve in business?

Answer 1

Depends on the type of economy-

In a traditional economy (such as the Inuits), individuals collaborate to make all decisions. The government is either nonexistent, or has little to no effect on business.

In a market economy, there is absolutely no government intervention- every single decision is made by businesses and individuals.

In a control economy, the government makes all the decisions- the government regulates everything, and controls all of the business.

In a mixed economy (usually some mix between market and control economies), the government places regulations on businesses to prevent market takeover, among other things. For instance, there are 4 main cell phone companies- T-Mobile, Verizon, Sprint, and AT&T. If the government didn't place regulations, Verizon might purchase the other three, and then, being the only cell company in operation, raise prices to a ridiculous rate. People would still buy from Verizon and pay these ridiculous prices, though, because there would be no alternative.