Book contents
- Frontmatter
- Contents
- Acknowledgments
- Contributors
- Introduction
- SECTION I BEYOND MARKET FAILURE
- 1 Government Failure vs. Market Failure: Principles of Regulation
- 2 Effective Regulation through Credible Cost-Benefit Analysis: The Opportunity Costs of Superfund
- 3 From “State Interference” to the “Return to the Market”: The Rhetoric of Economic Regulation from the Old Gilded Age to the New
- 4 Lessons from Europe: Some Reflections on the European Union and the Regulation of Business
- 5 Confidence Games: How Does Regulation Constitute Markets?
- SECTION II BEYOND THE ECONOMIC THEORY OF POLITICS
- SECTION III BEYOND COMMAND AND CONTROL
- Conclusion
- Index
- References
1 - Government Failure vs. Market Failure: Principles of Regulation
Published online by Cambridge University Press: 20 January 2010
Book contents
- Frontmatter
- Contents
- Acknowledgments
- Contributors
- Introduction
- SECTION I BEYOND MARKET FAILURE
- 1 Government Failure vs. Market Failure: Principles of Regulation
- 2 Effective Regulation through Credible Cost-Benefit Analysis: The Opportunity Costs of Superfund
- 3 From “State Interference” to the “Return to the Market”: The Rhetoric of Economic Regulation from the Old Gilded Age to the New
- 4 Lessons from Europe: Some Reflections on the European Union and the Regulation of Business
- 5 Confidence Games: How Does Regulation Constitute Markets?
- SECTION II BEYOND THE ECONOMIC THEORY OF POLITICS
- SECTION III BEYOND COMMAND AND CONTROL
- Conclusion
- Index
- References
Summary
The subject of regulation has been one of the most contentious, with critics arguing that regulations interfere with the efficiency of the market, and advocates arguing that well-designed regulations not only make markets more efficient but also help ensure that market outcomes are more equitable. As the economy plunged into a recession, with more than 3 million Americans already having lost their homes as this chapter goes to press and millions more likely to do so (unless the government intervenes more successfully than it has), and as the government spends hundreds of billions in bailouts to prevent the economic recession from growing worse, there is a growing consensus: There was a need for more government regulation. Even the high priest of laissez faire economics, Alan Greenspan, has admitted that he may have gone too far in believing that markets could be self-regulating.
Responding to these calls – as if to close the barn door after all the horses have gotten out – the Federal Reserve has tightened some regulations. If it is the case that better regulations could have prevented, or even mitigated, the downturn, the country, and the world, will be paying a heavy price for the failure to regulate adequately. And the social costs are no less grave – as hundreds of thousands of Americans will not only have lost their homes but also their lifetime savings.
- Type
- Chapter
- Information
- Government and MarketsToward a New Theory of Regulation, pp. 13 - 51Publisher: Cambridge University PressPrint publication year: 2009
References
, An Inquiry into the Nature and Causes of the Wealth of Nations, Chicago: University of Chicago Press, 1976Google Scholar
, “An Extension of the Basic Theorems of Classical Welfare Economics,” Proceedings of the Second Berkeley Symposium on Mathematical Statistics and Probability, , ed., Berkeley: University of California Press, 1951, pp. 507–532Google Scholar
and , “Externalities in Economies with Imperfect Information and Incomplete Markets,” Quarterly Journal of Economics, 1986, Vol. 101, No. 2 (May), pp. 229–64CrossRefGoogle Scholar
Economic Theory and the Welfare State, (ed.), Cheltenham, U.K.: Edward Elgar, 2000
, “The Role of the State in Financial Markets,” Proceeding of the World Bank Conference on Development Economics 1993, Washington, D.C.: World Bank, pp. 41–6Google Scholar
, “Perspectives on the Role of Government Risk-Bearing within the Financial Sector,” in Government Risk-bearing, (ed.), Norwell, MA: Kluwer Academic Publishers, 1993, pp. 109–30CrossRefGoogle Scholar
and , “Information and Regulation,” in Public Regulation, (ed.), London: MIT Press, 1987, pp. 3–43Google Scholar
and , op. cit. focus on price interventions, but Martin Weitzman (“Prices vs. Quantities,” The Review of Economic Studies, 41(4), October 1974, pp. 477–91)Google Scholar
, , , , and , Stability with Growth: Macroeconomics, Liberalization, and Development, The Initiative for Policy Dialogue Series, Oxford: Oxford University Press, 2006CrossRefGoogle Scholar
and , “Robust Financial Restraint,” in Financial Liberalization: How Far, How Fast?, and (eds.), Cambridge, U.K.: Cambridge University Press, 2001, pp. 31–63CrossRefGoogle Scholar
and , “Tariffs Versus Quotas As Revenue Raising Devices Under Uncertainty,” American Economic Review, 67(5), December 1977, pp. 975–81Google Scholar
and , “Credit Rationing in Markets with Imperfect Information,” American Economic Review, 71(3), June 1981, pp. 393–410Google Scholar
, The Gift Relationship: From Human Blood to Social Policy, New Press: New York, 1997 (reissue of 1970 book)Google Scholar
, “Blood and Altruism – Richard M. Titmuss' Criticism on the Commercialization of Blood,” Public Interest, Summer 1999Google Scholar
and , “Privatization, Information and Incentives,” Journal of Policy Analysis and Management, 6(4), 1987, pp. 567–82CrossRefGoogle Scholar
The Political Economy of Privatization and Deregulation, and (eds.), Edward Elgar, 1993
, “Regulating Multinational Corporations: Towards Principles of Cross-border Legal Frameworks in a Globalized World Balancing Rights with Responsibilities,” American University International Law Review, 23(3), 2008, pp. 451–558Google Scholar
, 1971, “The Theory of Economic Regulation,” Bell Journal of Economics, 2(1), Spring 1971, pp. 3–21CrossRefGoogle Scholar
and , “The Politics of Government Decision Making: a Theory of Regulatory Capture,” Quarterly Journal of Economics, 106(4) November 1991, pp. 1089–127CrossRefGoogle Scholar
and , “Regulatory Capture, Public Interest, and the Public Agenda: Toward a Synthesis,” Journal of Law, Economics, and Organization, 6, April 1990, pp. 167–98CrossRefGoogle Scholar
, “Central Banking in a Democratic Society,” De Economist (Netherlands), 146(2), 1998, pp. 199–226CrossRefGoogle Scholar
: “Human Fallibility and Economic Organization,” American Economic Review, 75(2), May 1985, pp. 292–6Google Scholar
“The Architecture of Economic Systems: Hierarchies and Polyarchies,” American Economic Review, 76(4), September 1986, pp. 716–27
“Committees, Hierarchies and Polyarchies,” The Economic Journal, 98(391), June 1988, pp. 451–70CrossRef
“Qualitative Properties of Profit-Maximizing K-out-of-N Systems Subject to Two Kinds of Failure,” IEEE Transactions on Reliability, 37(5), December 1988, pp. 515–20CrossRef
and , “On Value Maximization and Alternative Objectives of the Firm,” Journal of Finance, 32(2), May 1977, pp. 389–402CrossRefGoogle Scholar
“Stockholder Unanimity in the Making of Production and Financial Decisions,” Quarterly Journal of Economics, 94(3), May 1980, pp. 543–66CrossRef
and , and , 1980. “Takeover Bids, the Free-rider Problem and the Theory of the Corporation,” Bell Journal of Economics, 11(1), pp. 42–64CrossRefGoogle Scholar
“The Allocational Role of Takeover Bids in Situations of Asymmetric Information,” Journal of Finance, 36(2), 1981, pp. 253–70CrossRef
- 36
- Cited by