(Monday, 19th May 2014)
Title : The Development of Regulation
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Government regulation is extensive in all rich and middle-income
countries. It transcends not only levels of economic development, but
also cultures, legal traditions, levels of democratization, and all other
factors economists use to explain differences among countries. There
is surely a lot of variation across countries, but it pales by comparison
with the raw fact of ubiquity. Why is there so much government regulation?
Why has it grown?
I begin this lecture by reviewing the standard theories of economic
regulation, and arguing that they fail to account for the basic facts of
regulation. I then propose “The Enforcement Theory of Regulation,”
which sees regulation as one of several alternative strategies of social
control of business, of which the most prominent is dispute resolution
by courts. Because such resolution is often costly, unpredictable, and
ineffective, regulation, with all its faults, emerges as the more efficient
strategy for enforcing desirable conduct.
Bibliographical references :
The Failure of Judges and the Rise of Regulators written by Andrei Shleifer
Must read th 1st chapter.