Which of the following is not an argument for regulation?
A) Markets for information are not efficient, and therefore produce a sub-optimum amount of information given the problem of 'free riders'.
B) The capital market is efficient, but only 'on average'.
C) Capital markets require information, and therefore firms that do not supply it will be punished.
D) Information asymmetry exists, because not everyone has the same power over resources to obtain the information they need.

Question

Quizplus · Accepted Answer

Capital markets punishing firms that do not supply information is an argument against regulation, as it suggests that the market itself can enforce information disclosure without the need for regulatory intervention.

Which of the Following Is Not an Argument for Regulation