Industrial Regulation Industrial regulation is defined as the actions taken by a government to, deliberately, influence the economic activities

of firms (Mankiw, 2011). The industrial, economic regulations are the rules that govern entry controls and price controls of firms in an industry (Sherman, 2007). Industrial regulations are necessary, for they help in the regulation of malpractices and failures, in the market. Market failures such as barriers to entry, price controls and production are addressed by the industrial, economic regulation (Mankiw, 2011). The industrial regulations ensure that a) consumers are protected from price fixing and control of monopolies b) the market becomes more competitive as the grounds are laid for equal competition, c) performance is increased as the competitors in the markets need to use legal ways to improve their sales d)abnormal profits are not encouraged (Sherman, 2007). Industrial regulation affects the industries and consumers. The industries are forced to maintain economically achievable pricing methods. The regulation also helps in controlling the entry and exit rules thus controlling business in an industry. The consumers are protected from higher discriminating prices. Monopoly A monopoly occurs when a single firm is responsible for all supply in an industry. On the other hand, a natural monopoly is created as a result of high start-up or capital costs required, for a firm, to operate in an industry (Mankiw, 2011). The multiform production in such an industry is more costly than a monopoly. These monopolies are created through public ownership or regulations. Public ownership is used to ensure that there is abuse of power of power by the natural monopoly (Mankiw, 2011). The aim of the regulations is enable the public to enjoy the benefits of low cost production while avoiding reduction in the production or distribution

In some industries, especially the utilities industries, natural monopolies are encouraged. This is because; it would be economically inefficient if multiple firms were to operate in such an industry. The average costs of production in such monopolies are usually lower. An example of such a monopoly is the distribution of water. The distribution of water is not economically worth it but the costs of investment in so high. Also, the economies of scale of investing in smaller water supply systems are higher than those of larger systems thus creating a natural monopoly in the water sector is justified. Social regulation The social regulation of industries focuses on the conditions under which production occurs, societal impacts of such production, and the quality of goods produced. Social regulation examines production externalities and costs (Mankiw, 2011). Firms aim at making profits and increase their competitive advantage. To achieve this, most firms engage in anti social behaviors harmful to its workers, the environment and the general public. Therefore, social regulation laws are meant to control the effects of such industrial behavior. Social regulation, majorly, affects the employee, consumer and environment (Sherman 2007). a) It improves the working conditions of employees in industries; b) the consumer is protected from unsafe or unworthy goods or services; c) the regulation help in environmental preservation through anti pollution policies.

Antitrust laws The antitrust policies are rules set to regulate economic competition. These laws prevent monopolies by keeping the markets open and competitive. These laws are based on

four principal Acts; Sherman Act, Clayton Act, Robinson-Patman act and the Federal Trade Commission Act (Posner, 2001). The Sherman Act prohibits any agreements or conspiracy; for example price fixing, market division, or boycotts, meant to monopolize an industry (Posner, 2001). Competitors are not permitted to engage in any acts that signify their unity in enacting certain regulations that are not competitive in nature. The Clayton Act supplements the Sherman act by illegalizing any arrangements like mergers, acquisitions, and inter-related board activities that are meant to create monopolies by lessening competition (Posner, 2001). The third Act is the Robinson-Patman Act addresses the issue of discrimination of prices. The Act forbids discrimination pricing aimed at pushing other firms out of the market or increasing the purchasing power of others (Posner, 2001). The Federal Trade Commission Act authorizes the first three Acts (Posner, 2001). The Act is designed to counter anti competitive acts and practices in their initial stages. Regulatory commissions The three main regulatory commissions of industrial regulation are a) The Federal Trade Commission b) The Federal Energy Regulatory Commission and c) The Federal Communications Commission. These commissions are mandated with the task of a) maximizing competition in different industries fairly b) regulating and monitoring of electricity and other related production, distribution and licensing c) regulating the broadcasting industry.

Functions of social regulatory commissions The social regulatory commissions are mandated to ensure equal employment opportunity to all (Sherman, 2007). This is achieved through the Equal Employment

Opportunity Commission which oversees that there is no discrimination by providing information on laws governing employment. The protection of the environment and other related pollution activities is conducted by the Environmental Protection Agency. The government has ensured the work safety is observed through the Occupational Safety and Health Administration (Sherman, 2007). The commission conducts worksite inspections to ensure that the required safety conditions are met. Consumers are protected from potentially harmful unworthy products through the Consumer Product Safety Commission. Investors are also protected from the malpractices of the security exchange market. This is done by the Security Exchange Commission.

References
Mankiw N. G. (2011). Principles of Microeconomics. New York: Cengage learning Posner R. A (2001). Antitrust Law. Second edition. University of Chicago press. Sherman R. (2007). Market regulation. University of Houston: Prentice hall.