Picking goods and services in a market corrupts the regulatory process into a game of winners and losers. Competitive markets cannot sustain such intervention. D. Market determination of quality In a competitive market, the quality and characteristics of goods and services are determined by the power of supply and demand. In an overregulated market, these decisions are made by government administrators after protracted deliberations. Consumers wind up paying more than they wish for some services whose service quality is set too high, and do little for other goods and services whose quality is set too low.
Prices are the central form of information in a competitive market.
When bid up, prices help encourage entry. When bid down, prices encourage exit. Prices set too high encourage over investment and entry. Prices set too low discourage investment and entry. Under competition, markets determine how much is supplied for each good and services in each market.