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The Political Economy of Regulation

Published online by Cambridge University Press:  10 June 2011

P.M. Booth
P.M. Booth
Affiliation:
University Business School, Parxes Building, Northampton Square, London, EC1V 0HB, U.K. Tel: +44 (0)20 7477 8204; Fax: +44 (0)20 7477 8573; E-mail: [email protected]
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Abstract

This paper examines the political economy of regulation, reviewing market socialist, neo-classical and public interest approaches to regulation and analysing the development of financial services and insurance regulation in these frameworks. However, the paper suggests that these approaches do not capture properly many of the features of a market and the behaviour of regulators. Public choice theory is discussed, and it is concluded that there has not been significant capture of the regulatory process by interest groups. Austrian economics is proposed as a possible framework within which to analyse markets and regulators. It is concluded that there is prima facie evidence to suggest that the Austrian view of the market is realistic and that regulation in insurance markets can have unforeseen and undesirable effects. The author also concludes that, until 1970, insurance regulation did not deviate from principles which are appropriate if either a public choice or Austrian view is taken. However, the Financial Services Act 1998 and the Pensions Act 1995 do deviate from those principles.

Keywords

RegulationFinancial ServicesPublic Choice EconomicsAustrian Economics
Type
Sessional meetings: papers and abstracts of discussions
Information
British Actuarial Journal , Volume 3 , Issue 3 , 01 August 1997 , pp. 675 - 707
Copyright
Copyright © Institute and Faculty of Actuaries 1997

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