Why do some big businesses call for MORE regulation?

Brad Matthews economics category

Because they’re cronyists.

They want to create barriers to entry that will stop competitors from challenging their market domination.

They’ve already made it through the high-growth startup phase. They can weather additional burdens. Competitors who haven’t acquired enough market share or operate on razor thin margins to challenge the dominant players cannot. Therefore the incentives make it worthwhile for them to sacrifice profit complying with burdensome regulations. Especially if it means preventing competitors from a) continuing to convert customers to their product or b) from starting a competing business in the first place.

A similar situation is true for old millionaires and billionaires calling for higher income taxes. They’ve made their money, they don’t need to worry about tax any more. Calling for tax increases wins supporters and defenders which are more valuable to them than additional dollars. It also means (if passed), less rich(er) people in the future. This increases the value of their money relative to everyone else whose income starts being eaten up by taxes.

Like always, you have to consider the incentives at play to understand why people behave the way they do.

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