In an economic system, regulation refers to the placing of limits or restrictions on business activity by the government. This is done to ensure fair competition, protect consumers, maintain stability in the economy, and address social and environmental concerns. Government regulations can cover various aspects such as pricing, quality standards, safety requirements, environmental impact, labor practices, and more.
For example, regulations might include laws that dictate minimum wage levels, safety standards for food production, emission limits for factories, or rules to prevent monopolies in the market. By regulating business activities, the government aims to create a level playing field for all participants, prevent exploitation, and promote the overall well-being of society.
It's important to distinguish regulation from deregulation, which is the opposite process involving the removal of limits or restrictions on business activity by the government. Deregulation aims to promote competition, increase efficiency, and stimulate economic growth by reducing the bureaucratic burden on businesses.
