Law and Economics of Regulation

This book explores current issues regarding the regulation of various economic sectors,theoretically and empirically,discussing both neoclassical and behavioural economics approaches to regulation. It argues that regulations can promote public interests but can also lead to unintended consequences and serve the interests of powerful private interest groups. It also highlights the challenges of digitalisation and technological innovation in terms of both the type of regulation and the regulatory process.

Format: Paperback / softback
Length: 320 pages
Publication date: 26 April 2022
Publisher: Springer Nature Switzerland AG

The regulation of diverse economic sectors is a complex and multifaceted issue that requires a comprehensive theoretical and empirical approach. This book delves into the current challenges and issues related to the regulation of various economic sectors, encompassing both neoclassical and behavioral economics perspectives.

Regulation has emerged as a crucial factor in shaping modern economies, impacting virtually every industry. It serves as a means to establish guidelines, standards, and laws that govern the operations and interactions within these sectors. The promotion of public interests is often cited as a justification for regulatory interventions, aiming to address market imperfections, mitigate risks, and ensure fair competition.

One of the primary arguments in favor of regulatory interventions is the need to address markets that lack competition. By implementing regulations, governments can foster competition, promote efficiency, and prevent the accumulation of market power by dominant firms. This can lead to improved consumer outcomes, increased innovation, and a more balanced economic landscape.

Another rationale for regulation is the need to balance information asymmetries. Markets often exhibit information gaps, where one party has more knowledge or information than the other. Regulations can help level the playing field by requiring firms to disclose relevant information to consumers and other stakeholders, promoting transparency and fairness.

Furthermore, regulations can be used to internalize externalities, which are costs or benefits that are not fully accounted for in market transactions. By imposing taxes or fees on activities that generate externalities, governments can incentivize firms to reduce their negative impacts and promote social welfare.

Mitigating systemic risks is another important aspect of regulation. Financial crises, for instance, can have far-reaching consequences for the broader economy. Regulations can help prevent such crises by implementing prudential measures, such as capital requirements and stress tests, and by promoting financial stability.

Protecting consumers from irrational behavior is another rationale for regulatory interventions. Markets can be subject to biases, misinformation, and deceptive practices, which can harm consumers. Regulations can help address these issues by establishing consumer protection laws, promoting fair competition, and ensuring that consumers have access to accurate information.

However, it is important to note that regulations can also have unintended consequences and may serve the interests of powerful private interest groups rather than the public interest and social welfare. Moreover, the increasing pace of digitalization and technological innovation presents new challenges in terms of both the type of regulation and the regulatory process.

Part I of this book explores various theoretical approaches to the economic analysis of regulations. It examines the principles and theories underlying regulatory interventions, including the concept of public interest, market failures, and the role of government in promoting economic efficiency and stability. The book also discusses the challenges and limitations of traditional regulatory frameworks, such as command-and-control regulations and market-based regulations, and explores alternative approaches, such as regulatory economics and behavioral economics.

Part II of the book focuses on specific applications of the law and economics of regulation. It examines the regulation of different economic sectors, such as banking, telecommunications, healthcare, and energy. The book discusses the historical development of regulatory frameworks in these sectors, the economic implications of regulation, and the challenges and opportunities associated with regulatory reform.

In conclusion, the regulation of diverse economic sectors is a complex and multifaceted issue that requires a comprehensive theoretical and empirical approach. This book provides valuable insights into the current challenges and issues related to the regulation of various economic sectors, encompassing both neoclassical and behavioral economics perspectives. By examining the theoretical foundations of regulation, the specific applications of the law and economics of regulation, and the unintended consequences of regulatory interventions, this book aims to contribute to the ongoing debate about the appropriate role of government in shaping the economy and promoting social welfare.

Weight: 516g
Dimension: 235 x 155 (mm)
ISBN-13: 9783030705329
Edition number: 1st ed. 2021