What is a possible consequence of market imperfections?

Market imperfections, such as monopolies, oligopolies, or asymmetric information, can lead to situations where prices do not reflect true supply and demand dynamics. In such contexts, firms may engage in practices that can manipulate prices or limit competition, resulting in higher profits for businesses but harm to consumers.

In response to these market failures, regulators often step in to implement price controls or profit regulations to protect consumers and maintain fair market conditions. This scrutiny aims to curb exploitative pricing strategies and promote more competitive pricing behaviors to ensure that consumers have access to lower prices and fair practices. Thus, regulatory scrutiny becomes a likely consequence of market imperfections because it seeks to mitigate the impacts of these imperfections and restore balance in the market.