Short answers about Introduction to Political Economy Essay - 2

Short answers about Introduction to Political Economy - Essay Example Another cause of monopolies occurs when one firm expands to the point where it has tremendous economies of scale; other competitors drop out of the market because they cannot compete. Companies are likely to collude with each other if there are very few firms in an industry. Because of this, a change in one firm is likely to result in a change in another firm so that market forces remain the same. On the other hand, companies are likely to compete with each other when there is free market economy that allows consumers to pick and choose from many different companies. Regulations can cause a huge shift in the market, particularly in the labor market. When the government stipulates that employees must certain type of social security, employers have to respond to those changes. This can often mean that a business downsizes because it cannot afford to employ the same number of workers. Regulations primarily stifle business because of all the extra red tape that comes along with it. Capture theory stipulates that a government agency may allow the industry that it is charge of to dictate policy that favors the industry as a whole. On the other hand, public-interest theory deals with the interest of consumers. For example, when the market is not efficient as it could be, a regulatory body can act to make changes in regulations. The abolition of private property and the application of all rent to public purpose is designed for zoning laws that allow the government to own property. Progressive income tax makes all Americans pay their fair share. The abolition of all rights of inheritance offers limited inheritance through tax statues. Confiscation of property of rebels allows the government to seize property belonging to terrorist groups. Centralizing the credit system gives the state control over loans. Centralizing communication and transport allows the state to set regulations. Corporate capacity allows land to be improved. Equal labor