Should the fizzy drinks market be regulated or left to the free workings of the market?

This question is asking about the demerit good of fizzy drink consumption. this consumption leads to a negative externality (external cost to society) - this could be added cost to NHS from the increased likelihood of fillings and diabetes.Regulation + - should reduce consumption through increased prices (consumer/producer burden) and /or decrease production -unintended consequences and possibility of government failure so Free market + - Adam smith - invisible hand = optimal -doesn't take into account behavioural economics

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Answered by Matt B. Economics tutor

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