I think there&#x27;s a difference between regulating something and using government over markets to solve the problem.<p>For example, if the goal is a cleaner river, the inefficient way of solving the problem would be mandating a certain cleaning technology or giving a tax break to companies that install specific purification systems. That leads to a mindset of box checking compliance and the most politically well-connected companies winning out.<p>The better way is to impose a fine or maximum on the externality -- water pollution in this example -- and let the market work. Now the polluting company has an incentive to find the best anti-pollution techniques at the lowest cost and other companies can compete by developing different anti-pollution methods.