Government intervention is necessary since it protects the consumer from exploitation by traders engaging in various businesses. The government usually intervenes to ensure that there is an equitable distribution of income and wealth. It aims to boost the economic growth of the country. The government intervenes to prevent market failure. As thus, the government steps in to correct various issues that may get out of hand if left to businesses.
The government may use antitrust laws in setting up the restraint of trade. Here one party is denied the freedom to carry out business freely. The restriction includes a particular area and period that the seller should not engage in business activities. It used in places where trade secrets are to be safeguarded and where one party requests so.
Deregulation involves the elimination or reduction of regulations put in place by the state. As a result, the government reduces its control on various activities related to businesses. Its purposes are to increase more competition in the market,.Over regulating, is the consistent introduction of new regulations and laws incessantly? The companies are thus bombarded with many laws, which restrict them that usually burdens businesses. Indirect costs involve instances where the government places various costs in products like value added tax where the consumer and the companies have to cater for them.
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