Regulated market

In economics a regulated market, is a kind of market. In a free market, only the law of suipply and demand will fix the price. In a regulated market, the governent or other organization will change the these rules:

  • There may be minimum or maximum prices that can be charged
  • Some eoconic actors may be prohibited from entering the market
  • Actors who buy or sell on such a market often have to respect additional rules. They may have ot pay taxes, and they must respect laws to fight discrimiation, and to follow certaiin lablor laws.

There are often reasons why markets are regulated:

  • Sometimes, there are high barriers to entry, which is the case for telecommunications or energy sytems. This will lead to what are called natural monopolies. The regulation occurs to make sure that the market players do not have too much power
  • In pany parts of the world, the state subsidizes certain products. Very often, this is about agricultural products. The price a producer gets for a liter of milk is fixed, or it varies only slightly. This mean that the prices for dairy products in the stores are more or less stable.
  • In some cases, there may be a guaranteed minimum price or a maximum price that cannot be surpassed.
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