Sector Policy

Public policy establishes the legal constraints facing decision-makers and determines the jurisdictional responsibilities of different levels of government. The basic rationale is that market imperfections (market power and information gaps) and market failures (such as pollution) require some form of government intervention. Infrastructure policies tend to address three broad areas: market structure, corporate behavior, and sector performance. Antitrust regulation addresses mergers and anticompetitive behavior in the economy (including the exercise of market power). Sector policy tends to address those elements of the market structure (including the supply chain) that are viewed as natural monopolies. Government tends to intervene when economic or social problems affecting or originating from the sector catch the attention of those involved in political processes.