lead them to be more sympathetic towards requirements and needs of given industry, subsequently making the regulations more favourable towards the producers rather than the society. Examples Economic crowding out Crowding out is the displacement of private sector investment by way of higher interest rates, when the government expands its borrowing to finance increased expenditure or tax cuts in excess of revenue. Government spending is also said to crowd out private spending by individuals. Regulatory Regulatory arbitrage is a regulated institution's taking advantage of the difference between its real (or economic) risk and the regulatory position. Regulatory capture is the co-opting of regulatory agencies by members of or the entire regulated industry. Rent seeking and rational ignorance are two of the mechanisms which allow this to happen. Regulatory risk is the risk faced by private-sector firms that regulatory changes will hurt their business. Alexander Hamilton of the World Bank Institute argued in 2013 that rent extraction positively correlates with government size even in stable democracies with high income, robust rule of law mechanisms, transparency, and media freedom. Many Austrian economists, such as Murray Rothbard, argue that regulation is the source of market failure in the form of monopoly, adding that the term "natural monopoly" is a misnomer. From this perspective, all governmental interference in free markets creates inefficiencies and are therefore less preferable to private market self-correction. Distortion of markets Taxation can lead to market distortion. They can artificially change prices thus distorting markets and disturb the way markets allocate scarce resources. Also, taxes can give people incentive to evade them, which is illegal. Minimum price can also result in markets’ distortion (i.e. alcohol, tobacco). Consumer would spend more on harmful goods, therefore less of their income will be spent on beneficial goods. Subsidies can also lead to misuse of scarce resources as they can help inefficient enterprises by protecting them from free market forces. Price floors and price ceilings can also lead to social inefficiencies or other negative consequences. If price floors, such as minimum wage, are set above the market equilibrium price, they lead to shortage in supply, in case of minimum wage to a higher unemployment. Similarly the price ceilings, if set under the market equilibrium price, lead to shortage in supply. Rent ceiling for example may then lead to shortage in accommodation. Other problems often arise as consequences of these interventions. Black market of labor and