Sound public policy can enhance industry performance. But, excessive government intervention in the market place can stifle innovation and retard industry progress. Policy makers must strike the proper balance between productive intervention and reasoned laissez faire on a variety of fronts. For example, policy makers must decide which activities should be undertaken by the public sector and which should be carried out in the private sector. Policy makers must also determine when industry groups will police their members adequately, obviating the need for direct government control. In addition, policy makers must determine whether license requirements, quality standards, anti-discrimination clauses, industry participation rules and the like will provide benefits that outweigh associated costs. Such determination is particularly challenging in new, emerging markets, including those that involve the Internet.
Primary Industrial Organization researchers: