Regulations can create the monopolies they’re meant to prevent

Regulations can create the monopolies they’re meant to prevent

Why do large companies sometimes lobby for regulation in their own industries? When major crypto exchanges advocate for licensing or tech companies urge regulation of artificial intelligence, the explanation may be simpler than it appears: These companies understand how regulatory costs affect market structure.

In this article, The Dispatch examines how regulatory compliance costs affect market competition across various industries.

Regulations designed to protect consumers can reshape competitive dynamics in ways lawmakers don’t anticipate. The mechanism is straightforward economics: Regulatory compliance creates fixed costs, and fixed costs affect smaller competitors and new entrants differently than they affect esta