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Marketing and sales
Laws to protect consumers (eg refunds and replacement, 'cooling off' 
period after credit agreements), what is or isn't allowed in advertising 
Environment
Pollution control, waste disposal 
Tax law
Corporation tax payment, collection of income tax (PAYE) and National 
Insurance contributions, sales tax (VAT) 
Some legal and regulatory factors affect 
particular industries
, if the public interest is served. For 
example, in the UK, electricity and gas, telecommunications, water and rail transport are subject to 
regulators 
who have influence over market access, competition and pricing policy (can restrict price 
increase). These UK bodies are called Ofgem, Ofcom, Ofwat and ORR respectively. Other countries will 
have similar regulators.
This is because: 

The industries are, effectively, monopolies 

Large sums of public money are involved (eg in subsidies to rail companies) 
2.2 The impact of government 
Porter
 
notes several ways whereby the 
Government 
can directly affect the 
economic structure
of an 
industry. They are explained below. 
BPP Tutor Toolkit Copy

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CHAPTER 2
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THE BUSINESS ENVIRONMENT 
 
25 
Capacity expansion 
Government policy can encourage firms to increase or cut their capacity. 
(a) The UK tax system offers 'capital allowances' to encourage investment in 
equipment. 
(b) A variety of incentives, funded by the EU and national governments, exist 
for locating capacity in a particular area. 
(c) 
Incentives 
are used to encourage investment by overseas firms.
Demand 

The Government is a major customer.

Government can also influence demand by legislation, tax reliefs or 
subsidies.