BTW, if you want some good ammo against the "free market fixes everything" people then you want to read up on game theory, especially The Prisoner's Dilemma coupled with the concept of the Nash Equilibrium.
The point is that, in the Prisoner's Dilemma, if everyone cooperates, everyone is better off - both individually and as a group - yet this situation is unstable since any individual can look at the payout matrix, and see that no matter what anyone else does, you "gain" an "advantage" by backstabbing. So the Nash Equilibrium is that everyone decides they should backstab each other, even though this is paradoxically the worst outcome both as a group and as individuals.
What regulations and laws actually do is to force people to stay in the "cooperate" box, which is actually the optimal situation both individually and as a group. Complaining about the "costs" to enforce the regulations is thus pretty much bullshit, since that's not taking the opportunity costs into account (the global costs imposed by everyone backstabbing in the Prisoner's Dilemma model).
An example I've seen recently is people (not here, but on Slashdot) arguing that if electric cars are so good then there shouldn't need to be regulation on exhaust fumes, because the "free market" will see that the better, non-polluting cars should win out without needing regulation. But that doesn't take game theory into account, whatsoever. If *everyone* drives an electric car, then everyone needs to pay a bit more, but everyone will save on healthcare bills. however, any *one* person can say "well if I *don't* drive an electric car, I can save on transport costs, and the effects on my *personal* health from my decision will be pretty minimal, therefore I should drive a gasoline car". And this is always going to be true no matter what percentage of other people have gasoline or electric cars. So if you let them, people will devolve into the "cheaper for me but ends up fucking everyone else over" option, and everyone gets sick, and anyone who does the right thing ends up being the sucker in the game. so this is why regulations are needed - externalities, game theory, nash equilibriums.