Monday, April 13, 2009

Free Markets (5) - Regulation

A market is just a place where a whole lot of people can display their offers. Once we understand this fact, it is obvious that statement about regulation of markets need a little more content, before making sense. Regulating marketing could mean a number of things.

  1. Preventing markets from forming. This does not make sense, because bringing many offers together in one place helps buyers.
  2. Limiting the types of offers that can be made. That does not make sense because an offer is benign. Nothing happens until an offer is accepted, so there is no point in preventing people from making offers, even if they are unrealistic.
  3. Controlling the price range that can specified in offers. Some people would like to ban offers at low prices. Others would like to ban high prices. Both options seem to be pointless, as if prices are too high or too low, whatever that means, people will not accept the offers.
  4. Preventing certain types of people from accepting offers. I suppose children could be prevented from agreeing to purchase cigarettes that are offered to them, but that is really the responsibility of parents. Some suggest that foolish people should be prevented from accepting offers that are unrealistic, but that might be very difficult to assess.
  5. Preventing people making offers that are deceptive or fraudulent. This problem is already dealt with by laws against theft and fraud, so I am not sure that regulation is needed for this problem.
  6. Enforcing delivery of offered products once the offer has been accepted by a buyer. Laws against theft and breach of contract already deal with the situation where exchanges are not completed, so what can more regulation do.
Markets benefit people by providing information about all the offers that are available. The law already deals with the problems that can arise in a market, so those who want more market regulation must be more precise about what they intend.

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