Study Finds Well-Intentioned Regulation Often Undermines Competition and Increases Costs
A new analysis by Soriya Chhe and Marin Murdock argues that even sincere government rules can stifle innovation, raise prices and limit consumer choice.
In their August 20 study, Soriya Chhe and Marin Murdock of the Competitive Enterprise Institute describe a “Protection Paradox” where regulations intended to protect citizens end up restricting opportunity and suppressing competition. They illustrate the effect with OSHA’s expensive certification requirements for mobile elevating work platforms, which push out smaller manufacturers, and the SEC’s lack of due-process safeguards that force defendants into costly settlements.
Housing-market data cited by one outlet Bryan Caplan shows that heavily regulated cities such as New York and the Bay Area experience higher prices and less construction compared with lightly regulated markets like Houston and Dallas. The authors argue that these outcomes arise without any corrupt intent, simply from the structural incentives of government agencies. They conclude that a free-market system, driven by competition and dispersed judgment, is more likely to protect liberty and deliver efficient results than centralized regulatory authority.
Why it matters
Understanding how well-meaning rules can raise costs helps citizens evaluate the true impact of government regulation.
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