How government-industry collusion leads to poor consumer outcomes

Collusion between government agencies and the industries they are meant to police can result in over protective policies, which harm the consumer, but enrich the colluding partners.

These protective policies work to either:

(1) shield existing players in the market from outside competition to protect their profits, or, 

(2) favor certain preferred entities in the market at the expense of others, so that they will eventually come to dominate the market.

In both cases a small number of insiders benefit while the public loses out through higher prices and lower quality products due to the reduced competition the collusion creates.


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