Chapter 7 discussed four types of industry policy. The laissez-faire and supportive approaches view the role of the government as reinforcing the operation of market forces. The active and planning approaches argue for government intervention in the operation of industry. Whichever approach is adopted, industry policy will relate to four main areas: competition policy, regional policy, innovation policy, and trade policy. These policies can have wide-ranging effects on the operation of individual firms or particular industries and, consequently, on economic welfare. Although economic theory cannot always provide either a rationale or a justification for many of the measures implemented, it is still important to gauge their impact, even where such evaluation can be only qualitative.
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