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The former examine why regulation occurs. These theories include theories of market power, "interest group theories that describe stakeholders' interests in regulation," and "theories of government opportunism that describe why restrictions on government discretion may be necessary for the sector to provide efficient services for customers."
Regulation theory discusses historical change of the political economy through two central concepts, "regime of accumulation or accumulation regime" (AR) and "mode of regulation" (MR). The concept of regime of accumulation allows theorists to analyze the way production, circulation, consumption, and distribution organize and expand capital in a ...
Regulation can facilitate, maintain, or imitate markets. [3] Public interest theory is a part of welfare economics. It emphasizes that regulation should maximize social welfare and that regulation should follow a cost/benefit analysis to determine whether the increased social welfare outweighs the regulatory cost.
The mainstream economic theory of regulation treats politicians and administrators as brokers among interest groups. [4] [5] Bootleggers and Baptists is a specific idea in the subfield of regulatory economics that attempts to predict which interest groups will succeed in obtaining rules they favor. It holds that coalitions of opposing interests ...
Stigler is best known for developing the Economic Theory of Regulation (1971), also known as regulatory capture, which says that interest groups and other political participants will use the regulatory and coercive powers of government to shape laws and regulations in a way that is beneficial to them.
Regulatory capture theory is a core focus of the branch of public choice referred to as the economics of regulation; economists in this specialty are critical of conceptualizations of governmental regulatory intervention as being motivated to protect the public good.
Regulation in the social, political, psychological, and economic domains can take many forms: legal restrictions promulgated by a government authority, contractual obligations (for example, contracts between insurers and their insureds [1]), self-regulation in psychology, social regulation (e.g. norms), co-regulation, third-party regulation, certification, accreditation or market regulation.
Rent extraction [3] (Chinese: 抽租) [4] is a notion formulated by American jurist Fred S. Mcchesney (1948–2017) [5] in his 1987 essay Rent Extraction and Rent Creation in the Economic Theory of Regulation. [6]