With VW’s emissions cheating scandal, some have argued this proves the free market cannot be trusted and regulations are necessary. But, I wonder if the cheating is an effect of the regulation, rather than regulation the effect of cheating.
The following is purely speculative on my part. I am unaware of any studies done on this one way or the other. But here’s what I am thinking:
The governments created auto emissions. All vehicles needed to pass those standards to be sold. VW knew their vehicle(s) didn’t pass the standards but had to falsify the records in order to sell them. If those standards didn’t exist, VW could have been open about the actual emissions rather than hide it.
To be fair, it certainly is possible, perhaps even probable, that VW would have lied regardless. Liars rarely change their stripes. But the incentive to lie may have been lesser if the regulations weren’t there.