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Legal Regulations of Production Plans: Are They Unproductive?

Author

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  • Marek Litzman

    (Department of Economics, Faculty of Business and Economics, Mendel University in Brno, Zemědělská 1, 613 00 Brno, Czech Republic)

  • Martin Machay

    (Department of Economics, Faculty of Business and Economics, Mendel University in Brno, Zemědělská 1, 613 00 Brno, Czech Republic)

Abstract

Legal system forces every economic agent operating on the market to fulfil some amount of duties and it alternates their decision making. This regulation moves the equilibria of each individual subject including firms, which have to adjust their production plans in a way prescribed by the law. We develop a theoretical background of production under the legal regulation and compare alternate equilibria with different degrees of legal regulation, which is described as unproductive in economic literature. The model shows that regulated production plans and all used inputs are still productive but the level of satisfaction within the society is decreased.

Suggested Citation

  • Marek Litzman & Martin Machay, 2016. "Legal Regulations of Production Plans: Are They Unproductive?," Acta Universitatis Agriculturae et Silviculturae Mendelianae Brunensis, Mendel University Press, vol. 64(6), pages 2039-2046.
    • Handle: RePEc:mup:actaun:actaun_2016064062039
    DOI: 10.11118/actaun201664062039
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    References listed on IDEAS

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