As the purpose of this book is to study and discuss the relationship between government and the private sector it draws upon microeconomic theory to help explain the motivation for government intervention and its impact on the performance of the economy in general and industry sectors and businesses. In analysing the relationship between the state and the private sector the question of the economic role of government is raised, in terms of not just the size of the government but also the appropriate tasks for it to undertake and the form any government intervention should take. This is an important issue, as much research indicates that the long-run economic performance of a country is mainly determined by the quality of its public policies and institutional arrangements (IMF 2003; OECD 2003; World Bank 2006). In the Australian case scrutiny of the way government regulates private sector activity has become acutely important. Over the past 30 years the question about whether the costs of regulation of government on business are greater than the benefits of regulation has become paramount. In particular government regulation has been criticised as being more to the interest of private groups rather than the public at large: ‘Current interest in industry regulation has been stimulated by political and economic factors. Politically regulation has come to be viewed increasingly as an expression of interest group power. Questions have arisen as to whether regulations are serving the public interest or are merely channelling benefits to particular groups’ (Australia, Bureau of Industry Economics 1986).