What are market-based, supply-side policies?
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Focus on allowing markets to operate more freely with minimal government
intervention.
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Designed to increase the incentives for labor to work harder and more productively and
to increase the incentives for firms to invest and to increase productivity.
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Also described as institutional changes as they affect the structure, institutions and
rules that govern economic stakeholders
Market-based supply-side policies:

Reduction in household income taxes: When people work harder and earn more
money, they might have to pay higher taxed on a higher income level. With lower
income tax, people would not be taxed more for working more, then they have
incentive to work harder and become more productive, thus increasing the potential
output of the economy

Reductions in corporate tax:
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Business will be able to keep more of their profit  greater investment  more
capital  increase factor of production.
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More profit  more research & development  advance in technology
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If businesses know they can keep more of its profit  more incentive to produce
efficiently

Potential for firm to make higher profit  positive supply-side effects
Labor market reform
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Reduction in trade union power: trade union raise the cost of workers. Reducing
their power  union won’t be able to negotiate higher cost of labor  lower cost
of production for firms  increase number of workers that firm may hire
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Reduction or elimination of minimum wages: minimum wage might keep price of
labor above free market level. Reduction or elimination of minimum wages 
decrease cost of labor  increase AS
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Reduction in unemployment benefit: If unemployed people are given benefit, then
they have less incentive to work or find a job. By reducing unemployment benefit
 encourage unemployed people to take on jobs. This would work if jobs are
available

Deregulation: fewer regulation  lower cost of production  increase potential output

Privatization: Free market economist thinks that privately-owned firms will be much
more efficient. Nationalized firms have different goals, this means that they will
operate inefficiently

Policies to increase competition: competition encourage greater efficiency, and can
improve the productive potential of the economy
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Trade liberalization: By allowing free trade, exporting firms will have to be more
efficient to compete with foreign firms, they will need to improve their efficiency and
increase investment.