Vertucci – July 21 – Rationales For/Against Regulation

Business Issue with Competing Pressures:  Based on what you see in the three videos, identify a specific issue with competing pressures.  How is a business issue influenced by a social concern? 

The main issue for Parmigiano Reggiano is that competitors, such as Kraft, can make substitute products for the carefully crafted cheese of the Parma region. In a way, the substitution reminds me of “fast fashion” because a cheaper, less authentic version of the “real thing” is available for consumers. The concern is that customers are disinformed by the company that creates the substitute products. The business (Parmigiano Reggiano) then has to address the issue; in this case, Parmigiano Reggiano created a way for their authentic product to be recognized – with the unique pin dot pattern.

Rationales For and Against Regulation: Based on the issue you have selected, make one statement for government regulation to address the issue (rationale for regulation) and one statement for minimal regulation/the free market to address the issue (rationale against regulation):

The regulation of Parmigiano Reggiano can be viewed as necessary because companies must be honest with their customers. When Kraft says that their grated cheese is “100% Parmesan,” buyers believe in the authenticity. However, the real “parmesan” cheese is made in Parma and called Parmigiano Reggiano, so the Kraft customers have been misled. Disinformation is a crime in the U.S. and therefore regulation of such issues can be important.

In contrast, there is support for the free market in which consumers can make the decisions concerning cheese. The customers could decide that Parmigiano Reggiano is no longer a “delicacy” food and that the price should match that of Kraft’s 100% Parmesan Grated Cheese. The process of creating goods is for the benefit of consumers; therefore, consumers may be entitled to a say in the matter.

Other Examples Like This?:  Based on the competing pressures you see in this video, identify another issue that has an ongoing debate among people who argue for government regulation to address the issue versus those who argue that the free market should address the issue.

For environmental concerns, there is a fine line between free market and government regulation. The oil industry has fought against the laws that require oil tanker spill prevention because the companies want the free market. The people in support of government regulation argue that the intervention is needed for the environment because there have been pollution issues in the past. According to Chris Seabury of Investopedia, between the 1930s and 1960s, Ohio’s Cuyahoga River required government support ($1.5 billion) after industrial pollution was the cause of fire multiple times. The debate goes back and forth between free market and government regulation for environmental issues.