Research Article
Year 2016,
Volume: 8 Issue: 1, 226 - 240, 01.06.2016
Abstract
The traditional theory of regulation assumes that government implements regulation in response to market failures. The orthodox view only justifes economic regulation, but does not account for the costs and dangers of regulations. Government regulations have the potential to bring benefits for the people, but they also have potential to be abused and to bring benefits for the special interest groups at the expense of general public. One can understand and justify the reasons why economic regulations are necessary, however one must also accept that it is impossible to enact rational regulation. For example, rational ignorance of the general public results in irrationalities when economic regulations are chosen to implement at the political decision making process. There is such a thing as impossibility of rational and efficient regulation.
This paper aims to explore the possibility and impossibility of rational regulation are discussed from the perspectives of public choice economics, economics of property rights, new institutional economics and constitutional economics.
Keywords
References
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Buchanan, “Constitutional Economics”, in: J.M.Buchanan, Explorations into Constitutional Economics, College Station: Texax A-M University Press, 1989). Blumel, Wolfgang; Rudiger Pethig and Oskar von Dem Hagen., "The Theory of Public Goods: A Survey of Recent Issues", Journal of Institutional and Theoretical Economics, vol 142, 1986. pp.241-309. Brennan Geoffrey and Alan Hamlin, “Constitutional Economics”, The New Palgrave, Vol 1, 1994. pp. 401-409. Brown C.V. & P.M.Jackson, Public Sector Economics, 4th ed. Oxford: UK; Blackwell, 1994. p.48. Buchanan, James M.; The Demand and Supply of Public Goods, Chicago: 1968. Buchanan, James M., “The Minimal Politics of Market Order”, Cato Journal, Vol 11, No 2, Fall 1991. p.216. Buchanan, James M., “Constitutional Economics”, in: J.M.Buchanan, Explorations into Constitutional Economics, College Station: Texax A-M University Press, 1989. Buchanan, James M., “Tax Reform in Constitutional Perspective”, in: Law and Economics –Reprrint From A Symposium in Sweeden 1977, Edited by Göran Skogh, Lund: Jurisdiska Föreningen i Lund. Buchanan, James M., “The Political Efficiency of General Taxation”, National Tax Journal, Vol 46, December 1993. Buchanan, James M. “The Limits of Taxation” in: Taxation –An International Perspective- Proceedings of and International Conference, W.Block and M.Walker (eds.), Vancouver: The Fraser Institute, 1984. Coase, Ronald H., “The Problem of Social Cost”, Journal of Law and Economics, 17, 1960. pp.53-71. Cornes, Richard and Todd Sandler., The Theory of Externalities, Public Goods and Club Goods, Cambridge: Cambridge University Press, 1986. Crew, Michael A. and Charles K. Rowley., “Toward A Public Choice Theory of Monopoly Regulation”, Public Choice, 57, 1988. p.49-67. Demsetz, Harold., "Why Regulate Utilities", Journal of Law and Economics, 1968. pp. 55-66. Demsetz, Harold., “Property Rights”, in: The New Palgrave Dictionary of Economics and the Law (ed. Peter Newman), vol3, London:Macmillan, 1998. Domberger, S., "Economic Regulation Through Franchise Contracts", Paper to IFS Regulation Conference. 1985. Ekelund, Robert B. and Rebert D. Tollison.; Economics, Boston: Little, Brown and Company, 1986. Geddes, Rick., “Public Utilities”, http://encyclo.findlaw.com/5940book.pdf. Guasch J. Louis and Robert W. Hahn., “The Costs and Benefits of Regulation: Some Implications for Developing Countries”, (Background Paper for World Development Report.) March-1997. Hantke-Domas, Michael, “The Public Interest Theory of Regulation: Non-Existence or Misinterpretation?”, Eurepean Journal of Law and Economics, 15, 2003. pp.165-94. Hanke, Steve H., "The Theory of Privatization", in Stuart M. Buttler (Ed.), The Privatization Option -A Strategy to Shrink the Size of Government-, Washington: 1985. Hayek, F.A.von., The Mirage of Social Justice, vol 2 of Law, Legislation and Liberty, London: Routledge, 1976. Hayek, F.A.von., The Constitution of Liberty, Chicago: University of Chicago Press, 1960. Head, John. Public Goods and Public Welfare, Durham: Duke University Press, 1974. Hertog, Johan den., “General Theories of Regulation”, 1999. (http://encyclo.findlaw.com/5000book.pdf.) Holcombe Randall G., Public Sector Economics, Wadsworth Publ. Co. 1988. Johnson, Averch and L.L.Johnson., “Behaviour of the Firm Under Regulatory Constraints”, 52, American Economic Review, 1962. pp. 1052-69. Kasper, Wolfgang and Manfreid E. Streit, Institutional Economics –Social Order and Public Policy-, Cheltanham UK: Edward Elgar, 1998. Kay, John A. and Vickers, John S., “Regulatory Reform: An Appraisal”, in: Deregulation or Re-regulation, (edited by Majone Giandomenico), London: Pinter Publishers, pp. 223-51. Kirzner, Israel., “The Perils of Regulation: A Market-Process Approach”, in: Discovery and the Capitalist Process, Chicago: The University of Chicago Press, 1985. Krueger, Anne O. “The Political Economy of the Rent Seeking Society”, 64, American Economic Review, 1974. pp.291-303. Migue, Jean-Luc., “Controls versus Subsidies in the Economic Theory of Regulation” Law and Economics, Vol 20, No 214. 1977. Musgrave, Richard A.; The Theory of Public Finance, London: 1958. Netz, Janet., “Price Regulation: A (Non-Technical) Overview”, 1999 (http://encyclo.findlaw.com/5200book.pdf.) North, Douglas C., “The Contribution of the New Institutional Economics to an Understanding of the Transiton Problem”. (UNU/WIDER 1997 Annual Lecture), http://www.wider.unu.edu/northpl.htm North, Douglas C., Insitutions, Institutional Change, and Economic Performance, Cambridge: Cambridge University Press, 1990. North, Douglas C. “Economic Performance Through Time”, Nobel Memorial Prize Lecture, reprinted in: Empirical Studies in Institutional Change, ed. L.C.Alston, T. Eggertsson and D.C. North, Cambridge: Cambridge University Press, 1996. North, Douglas C. and Robert P. Thomas, The Rise of the Western World: A New Economic History, Cambridge: Cambridge University Press, 1973. Ogus, Anthony., “Self-Regulation”, 1999. (http://encyclo.findlaw.com/9400book.pdf.) OECD., Recommendation of the Council of the OECD on Improving the Quality of Government Regulation, (Adopted on 9 March 1995.) Pasour, E.C.; "Rent Seeking: Some Conceptual Problems and Implications", in: Murray N. Rothbard (Ed.), The Review of Austrian Economics, vol: 1, Lexington Books, DC. Heat and Company, 1987. Pera, Alberto.; "Deregulation and Privatization in an Economy-Wide Context", in OECD Economic Studies, No: 12, Spring- 1989. Samuelson, Paul A. and William D. Nordhaus, Economics, 14th ed. New York: McGraw-Hill Inc, 1992. Samuelson, Paul A.; "The Pure Theory of Public Expenditure", Review of Economics and Statistics, Nov-1954, pp. 387-89. Samuelson, Paul A.; "Diagrammatic Exposition of A Theory of Public Expenditure", Review of Economics and Statistics, Now 1955, pp. 350-56. Samuelson, Paul A.; "Aspects of Public Expenditure Theories", Review of Economics and Statistics, Nov-1958, pp. 332-38. Savas, E.S.; Privatization, The Key To Better Government, New Jersey: Chatham House Publishers, Inc. 1987. Spencer, Milton H., Contemporary Economics, 7th ed. New York: Worth Publ. 1990. Stigler, George., "The Theory of Economic Regulation", Bell Journal of Economics and Management Science, Vol. 2, 1971, pp. 3-21. Tollison, Robert D.; "Rent Seeking: A Survey", Kyklos, vol 35, 1982, pp. 575-602. Tullock, Gordon.; "Welfare Costs of Tariffs, Monopolies and Theft", Western Economic Journal, vol 5, June-1967, pp. 224-32. Vanberg, Viktor J. “Markets and Regulation on the Contrast Between Free-Market Liberalism and Constitutionalism”, Freiburg Discussion Papers on Constitutional Economics. 98/1. Winston, Clifford., “Economic Deregulation: Days of Reckoning for Microeconomists”, Journal of Economic Literature, vol 31, Issue 3, September 1993. 1263-89.
Year 2016,
Volume: 8 Issue: 1, 226 - 240, 01.06.2016
Abstract
References
- Aktan, Coskun Can., “Regulation and Control vs. Deregulation and Decontrol”, DEÜ - İİBF Dergisi, Cilt.8, Sayı: 2, Yıl 1993 (a), pp.120-136. Aktan, Coskun Can., “A Normative Analysis of Privatization: Which Public Goods Should Be Public/Private?, DEÜ- İİBF Dergisi, Cilt.8, Sayı: 1, Yıl 1993(b), pp.124-138. Aktan, Coskun Can., “Intellectual Origins of Privatization Movement”, DEÜ-İİBF Dergisi, Cilt.7, Sayı: 1, Yıl 1992, pp.185-206. Akerlof, George A., “The Markets for ‘Lemons’: Qualitative Uncertainties and the Markte Mechanism”, 84, Quarterly Journal of Economics, pp.488-500. Bator, Francis M., “The Anatomy of Market Failure”, Quarterly Journal of Economics, 72, 1958. pp. 351-79. Becker, Gary., “A Theory of Competition Among Pressure Groups for Political Influence”, The Quarterly Journal of Economics, vol XCVIII, August 1983. No3. pp.371-400. Brennan, Geoffrey and Alan Hamlin, “Constitutional Economics”, The New Palgrave, Vol 1, pp. 401-409. see also: James M. Buchanan, “Constitutional Economics”, in: J.M.Buchanan, Explorations into Constitutional Economics, College Station: Texax A-M University Press, 1989). Blumel, Wolfgang; Rudiger Pethig and Oskar von Dem Hagen., "The Theory of Public Goods: A Survey of Recent Issues", Journal of Institutional and Theoretical Economics, vol 142, 1986. pp.241-309. Brennan Geoffrey and Alan Hamlin, “Constitutional Economics”, The New Palgrave, Vol 1, 1994. pp. 401-409. Brown C.V. & P.M.Jackson, Public Sector Economics, 4th ed. Oxford: UK; Blackwell, 1994. p.48. Buchanan, James M.; The Demand and Supply of Public Goods, Chicago: 1968. Buchanan, James M., “The Minimal Politics of Market Order”, Cato Journal, Vol 11, No 2, Fall 1991. p.216. Buchanan, James M., “Constitutional Economics”, in: J.M.Buchanan, Explorations into Constitutional Economics, College Station: Texax A-M University Press, 1989. Buchanan, James M., “Tax Reform in Constitutional Perspective”, in: Law and Economics –Reprrint From A Symposium in Sweeden 1977, Edited by Göran Skogh, Lund: Jurisdiska Föreningen i Lund. Buchanan, James M., “The Political Efficiency of General Taxation”, National Tax Journal, Vol 46, December 1993. Buchanan, James M. “The Limits of Taxation” in: Taxation –An International Perspective- Proceedings of and International Conference, W.Block and M.Walker (eds.), Vancouver: The Fraser Institute, 1984. Coase, Ronald H., “The Problem of Social Cost”, Journal of Law and Economics, 17, 1960. pp.53-71. Cornes, Richard and Todd Sandler., The Theory of Externalities, Public Goods and Club Goods, Cambridge: Cambridge University Press, 1986. Crew, Michael A. and Charles K. Rowley., “Toward A Public Choice Theory of Monopoly Regulation”, Public Choice, 57, 1988. p.49-67. Demsetz, Harold., "Why Regulate Utilities", Journal of Law and Economics, 1968. pp. 55-66. Demsetz, Harold., “Property Rights”, in: The New Palgrave Dictionary of Economics and the Law (ed. Peter Newman), vol3, London:Macmillan, 1998. Domberger, S., "Economic Regulation Through Franchise Contracts", Paper to IFS Regulation Conference. 1985. Ekelund, Robert B. and Rebert D. Tollison.; Economics, Boston: Little, Brown and Company, 1986. Geddes, Rick., “Public Utilities”, http://encyclo.findlaw.com/5940book.pdf. Guasch J. Louis and Robert W. Hahn., “The Costs and Benefits of Regulation: Some Implications for Developing Countries”, (Background Paper for World Development Report.) March-1997. Hantke-Domas, Michael, “The Public Interest Theory of Regulation: Non-Existence or Misinterpretation?”, Eurepean Journal of Law and Economics, 15, 2003. pp.165-94. Hanke, Steve H., "The Theory of Privatization", in Stuart M. Buttler (Ed.), The Privatization Option -A Strategy to Shrink the Size of Government-, Washington: 1985. Hayek, F.A.von., The Mirage of Social Justice, vol 2 of Law, Legislation and Liberty, London: Routledge, 1976. Hayek, F.A.von., The Constitution of Liberty, Chicago: University of Chicago Press, 1960. Head, John. Public Goods and Public Welfare, Durham: Duke University Press, 1974. Hertog, Johan den., “General Theories of Regulation”, 1999. (http://encyclo.findlaw.com/5000book.pdf.) Holcombe Randall G., Public Sector Economics, Wadsworth Publ. Co. 1988. Johnson, Averch and L.L.Johnson., “Behaviour of the Firm Under Regulatory Constraints”, 52, American Economic Review, 1962. pp. 1052-69. Kasper, Wolfgang and Manfreid E. Streit, Institutional Economics –Social Order and Public Policy-, Cheltanham UK: Edward Elgar, 1998. Kay, John A. and Vickers, John S., “Regulatory Reform: An Appraisal”, in: Deregulation or Re-regulation, (edited by Majone Giandomenico), London: Pinter Publishers, pp. 223-51. Kirzner, Israel., “The Perils of Regulation: A Market-Process Approach”, in: Discovery and the Capitalist Process, Chicago: The University of Chicago Press, 1985. Krueger, Anne O. “The Political Economy of the Rent Seeking Society”, 64, American Economic Review, 1974. pp.291-303. Migue, Jean-Luc., “Controls versus Subsidies in the Economic Theory of Regulation” Law and Economics, Vol 20, No 214. 1977. Musgrave, Richard A.; The Theory of Public Finance, London: 1958. Netz, Janet., “Price Regulation: A (Non-Technical) Overview”, 1999 (http://encyclo.findlaw.com/5200book.pdf.) North, Douglas C., “The Contribution of the New Institutional Economics to an Understanding of the Transiton Problem”. (UNU/WIDER 1997 Annual Lecture), http://www.wider.unu.edu/northpl.htm North, Douglas C., Insitutions, Institutional Change, and Economic Performance, Cambridge: Cambridge University Press, 1990. North, Douglas C. “Economic Performance Through Time”, Nobel Memorial Prize Lecture, reprinted in: Empirical Studies in Institutional Change, ed. L.C.Alston, T. Eggertsson and D.C. North, Cambridge: Cambridge University Press, 1996. North, Douglas C. and Robert P. Thomas, The Rise of the Western World: A New Economic History, Cambridge: Cambridge University Press, 1973. Ogus, Anthony., “Self-Regulation”, 1999. (http://encyclo.findlaw.com/9400book.pdf.) OECD., Recommendation of the Council of the OECD on Improving the Quality of Government Regulation, (Adopted on 9 March 1995.) Pasour, E.C.; "Rent Seeking: Some Conceptual Problems and Implications", in: Murray N. Rothbard (Ed.), The Review of Austrian Economics, vol: 1, Lexington Books, DC. Heat and Company, 1987. Pera, Alberto.; "Deregulation and Privatization in an Economy-Wide Context", in OECD Economic Studies, No: 12, Spring- 1989. Samuelson, Paul A. and William D. Nordhaus, Economics, 14th ed. New York: McGraw-Hill Inc, 1992. Samuelson, Paul A.; "The Pure Theory of Public Expenditure", Review of Economics and Statistics, Nov-1954, pp. 387-89. Samuelson, Paul A.; "Diagrammatic Exposition of A Theory of Public Expenditure", Review of Economics and Statistics, Now 1955, pp. 350-56. Samuelson, Paul A.; "Aspects of Public Expenditure Theories", Review of Economics and Statistics, Nov-1958, pp. 332-38. Savas, E.S.; Privatization, The Key To Better Government, New Jersey: Chatham House Publishers, Inc. 1987. Spencer, Milton H., Contemporary Economics, 7th ed. New York: Worth Publ. 1990. Stigler, George., "The Theory of Economic Regulation", Bell Journal of Economics and Management Science, Vol. 2, 1971, pp. 3-21. Tollison, Robert D.; "Rent Seeking: A Survey", Kyklos, vol 35, 1982, pp. 575-602. Tullock, Gordon.; "Welfare Costs of Tariffs, Monopolies and Theft", Western Economic Journal, vol 5, June-1967, pp. 224-32. Vanberg, Viktor J. “Markets and Regulation on the Contrast Between Free-Market Liberalism and Constitutionalism”, Freiburg Discussion Papers on Constitutional Economics. 98/1. Winston, Clifford., “Economic Deregulation: Days of Reckoning for Microeconomists”, Journal of Economic Literature, vol 31, Issue 3, September 1993. 1263-89.
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Details
| Journal Section | Articles |
|---|---|
| Authors | |
| Publication Date | June 1, 2016 |
| Published in Issue | Year 2016 Volume: 8 Issue: 1 |