Over Time,state and Local Governments Have Passed Regulations That Limit

question 50

Essay

Over time,state and local governments have passed regulations that limit entry into certain markets.For example,in most locations beauty shops and barber shops must obtain a license to do business.The usual justification for such licensing requirements is to better ensure that only qualified people are offering such services.Considering the efficiency implications of having more or less firms serve a particular market,and the fact that consumers can "vote with their feet" (i.e.,buy from a different if they aren't satisfied),is such regulation justified from an economic perspective? Why or why not?

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Definitions:

Scrambled Merchandising

Selling goods and services that may be unrelated to each other and to the firm’s original business.

Corporate Chain

A series of businesses or retail outlets owned and operated by a single company.

Franchise Arrangement

A type of licensing arrangement where a franchisor allows a franchisee to use its business model and brand for a prescribed period.

Stout

A dark, thick beer with a distinctive malt flavor, originally associated with England.