chapter  5
24 Pages


Government intervention in the economy takes many forms: taxes and subsidies, regulations, direct action through public provision, etc. The same characterization holds with respect to government intervention in the health care market. The definition of the legal framework also affects the behavior of economic agents. It is another tool for governments to influence economic activity. Some types of regulation are universally accepted, like the minimum age to access the labor market, or safety in the workplace, but many others are controversial like the application of positive action for gender or race, antitrust laws, price discrimination practices, patents, waste disposal, environmental pollution, etc. The generic question that we tackle in this chapter is: Why regulate?