John Stossel writes here about the effect of regulation on business — in particular, the auto industry when it comes to fuel economy standards. Stossel got reaction from Susan Dudley of the Regulatory Studies Center at George Washington University.
You’d think automakers would strongly oppose these regulations – but if so, why, when President Obama unveiled the regulations, did the heads of 13 car companies shake Obama’s hand and smile?
“Even if it is a $60 billion cost to them,” says Dudley, “if everyone has to do it, they can pass it on to consumers.”
In other words, normally companies compete to do things more efficiently than rivals, in order to charge lower prices and get the lion’s share of customers. But there’s no need to worry about jacking up your prices when your rivals must do so, too. Regulation makes companies lazier, not more efficient.
