Industrial regulation is a set of policies and restrictions created to limit the power of monopolies and simultaneously protect consumers. Industrial regulation exists because left unchecked, large trusts or corporations can control markets and prices in ways that unfairly hurt consumers. Industrial regulation affects markets by limiting business practices of firms and ensuring that ample competition exists. The entities that are most affected by industrial regulation would be natural monopolies and firms considered part of an oligopoly. Firms fitting those descriptions can find their price and production outputs being monitored and controlled by governments or public agencies through public ownership or public regulation. The purpose of those regulations is typically to ensure that fair output and prices are being observed that protect the consumer while simultaneously allowing for the controlled firm to maintain a profit.
Social regulation relates to the impact of businesses on consumers, workers, the environment, and other interests not specifically tied to business output, prices, and profits. This can be the physical qualities of the goods produced, the conditions under which production occurs, and the impact of production on society. Social regulation exists to increase economic efficiency and society’s well-being by: removing unsafe products; improving working conditions and safety; decreasing economic discrimination; and reducing pollution. Social regulation is very broad in it’s scope and pretty much encompasses all businesses, some more than others. For instance, pretty much all businesses are responsible to provide equal opportunity to the public in their hiring and business practices. OSHA safety regulations affect all workers, but office workers may not be as aware or exposed to the regulations protecting physical safety as much as a factory or construction laborer might.
Natural monopolies are businesses and industries that typically have a homogenous product and the large capital investment required to enter the market are soo large that it’s difficult for new businesses to enter the industry. At this point, it makes more sense for one firm to control the market to take advantage of economies of scale to pass down to the consumer. Left alone, the natural monopoly may take advantage of the situation by limiting production and increasing prices. To counteract that, regulation or public acquisition of the industry occurs to force the company to produce and sell at reasonable prices that are good for the consumer and allow for a profit to company. A common example of this might be a power company. Lines, power stations, and other infrastructure are soo expensive that if two or more companies were competing for the exact same customers and duplicating efforts it could be very expensive. They need to be regulated though because since they’re typically the only company serving whole areas, the consumers of the area could be taken advantage of by price gouging.
Four primary laws were enacted over several decades to protect consumers: The Sherman Act of 1890; Clayton Act of 1914; The Federal Trade Commission Act of 1914; and the Celler-Kefauver Act of 1950. The Sherman Act of 1890 prohibited conspiracies that could restrain trade and outlawed monopolization. Firms found violating the Sherman Act could be ordered dissolved by the courts; be prohibited from engaging in the unlawful practices; be fined or imprisoned; or be sued by injured parties for triple damages. The Clayton Act of 1914 elaborated and strengthened the Sherman Act by outlawing price discrimination, forbidding tying contracts, and prohibiting mergers which substantially lessen competition. The Federal Trade Commission Act of 1914 created the Federal Trade Commision (FTC) to enforce antitrust laws. The FTC investigates unfair competitive practices and polices deceptive acts or practices in commerce. The Celler-Kefauver Act of 1950 ammended section 7 of the Clayton Act so that it would include acquiring the physical assets of a competing firm as well as stock of the competitors.
Three main regulatory commissions that govern industrial regulation are the Federal Energy Regulatory Commission, Federal communications Commission, and various state public utility commissions. The Federal Energy Regulatory Commission has jurisdiction over electricity, gas, gas pipelines, oil pipelines, and water-powered sites. Most of these affect multiple states and universal rules and laws governing them are best managed at the federal level. Most of the projects and their operations are overseen and approved by the Federal Energy regulatory Commission.
The Federal Communications Commission (FCC) has jurisdiction over telephones, television, cable television, radio, telegraph, CB radios, ham operators, etc. The airwaves and public lines these are broadcast over belong to the public and proper governance of the rules and operations of them ensures that the public is safe and operations aren’t intruding on other operators rights.
State public utility commissions typically have jurisdiction over electricity, gas, and telephones. These more localized commissions can more properly regulate prices and ensure proper output for the communities being served than a federal commission would be able to perform.
Five primary federal regulatory commission that govern social regulation include the Food and Drug Administration (FDA), Equal Employment Opportunity Commission (EEOC), Occupational Safety and Health Administration (OSHA), Environment Protection Agency (EPA), and the Consumer Product Safety Commission (CPSC). The FDA was necessary to ensure than consumable products were safe for public health. EEOC was necessary to ensure that all people had an equal chance at opportunity and employment regardless of factors as age, sex, race, and nationality. OSHA ensures that all workers are being afforded the right to a safe work environment. The EPA ensures that business practices are not going to hurt our shared heritage for a clean environment. The CPSC ensures that the products that we use are free of negligent harmful effects where there may be a temptation to cut corners to produce cheaper but not as safe products or even just ensure that business full think through safety precautions of their products before putting them out to the market.