Friday, November 16, 2012

How regulation favors the huge

Most regulation favors large companies in the target industry over the small, because compliance with regulation is mostly a fixed cost. It will cost a small company as much, or almost as much, as a large one to reprogram its computers to track a particular type of data demanded by the government, for example. With enough regulation, small companies will not be able to compete, and large companies will increase their share of the market either by consolidating the little guys or by destroying them. That many people who favor command-and-control regulation also romanticize small, local business over "corporations" without acknowledging this fundamental inconsistency is one of life's little mysteries.

Anyway, occasionally a journalist notices that regulation usually hurts small businesses to the benefit of the large.

This will be a recurring theme here at The Spirit of Enterprise.

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