Assume that Microsoft Corp want to expand and has to make some long-term capital budgeting decisions. Now the industry is confronted with government regulations to oversee the merger.

1. Explain why government regulation is needed, citing the major reasons for government involvement in a market economy.

2. Justify the rationale for the intervention of government in the market process in the U.S.

3. Assuming that the merger faces some threats and that the industry decides on self-expansion as an alternative strategy, describe the additional complexities that would arise under this new scenario of expansion via capital projects.