ABSTRACT
This chapter is only a summary of the most important aspects of the large subject of government regulation. In poor countries, the conventional justifications have been expanded by the argument that the market mechanism is especially imperfect and thus that more government regulation is called for. Government regulation is essential for defining and protecting property rights and important to foster competition, correct market failures, protect public safety, and promote sound social and environmental policies. The decision on whether to introduce or eliminate a particular government rule thus revolves around its relative costs and benefits. A government rule presumably fits certain conditions at the time of its introduction and, because conditions change, periodic regulatory review is desirable. Rules cannot be enforced unless the vast majority of those affected obey them voluntarily, and the majority will not voluntarily obey rules set arbitrarily or by a government viewed as illegitimate.
