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Saturday, February 27, 2010

Rationality of decision making by market players is by itself ethical. As such there is no need to regulate a market that is functioning efficiently. Do you agree? Discuss.

I disagree because there were many cases that shown the market players try to take advantage in the loop holes of the system for example insider dealing. The regulations to control the market are needed because eventually, fraud will happen in the market. This happen because there is incentive, coming from greed intensity, will lead that to happen. There is also an opportunity for it to happens and it is hard for unethical people for not to make bad things. These are some of the justifications for the needs of laws and regulations to be in place in order to prevent it. There are also the needs for protection of interest of the market player for their rights and to preserve justice and equality.

Regulations are also needed if there is any dispute between market players over business transactions. When there is a regulatory framework in place, any dispute can be settled efficiently.

Income disparity will normally happen when certain groups within society suffer from social inequality within a society. Thus, market needs to be regulated in order to prevent it. Without regulations in the market, monopolistic situation can occur. In monopolistic situation, the market will be in efficient thus lead to wage gap between socio-economic groups within the society.

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