Theories of Economic Regulation

Bibliographic Data

ID23320132
AuthorsRichard A Posner (National Bureau of Economic Research, corresponding author)
Year1974
Volume5
Issue2
Pages335
Publication date1974-01-01
Peer ReviewedYes
Open AccessNo
TypeARTICLE
VenueThe Bell Journal of Economics and Management Science (JOURNAL)
Journal identifiersISSN: 0005-8556 • E-ISSN: 2325-5323
PublisherJSTOR (PUBLISHER)
DOI10.2307/3003113
OpenAlexW2107431528
LanguageEN
Citations received200
References cited2

A major challenge to social theory is to explain the pattern of government intervention in the market - what we may call regulation. Properly defined, the term refers to taxes and subsidies of all sorts as well as to explicit legislative and administrative controls over rates, entry, and other facets of economic activity. Two main theories of economic regulation have been proposed. One is the theory, bequeathed by a previous generation of economists to the present generation of lawyers. This theory holds that regulation is supplied in response to the demand of the public for the correction of inefficient or inequitable market practices. It has a number of deficiencies that we shall discuss. The second theory is the theory - a poor term but one that will do for now. Espoused by an odd mixture of welfare state liberals, Marxists, and free-market economists, this theory holds that regulation is supplied in response to the demands of interest groups struggling among themselves to maximize the incomes of their members. There are crucial differences among the capture theorists. I will argue that the economists' version of the theory is the most promising but shall also point out the significant weaknesses in both the theory and the empirical research that is alleged to support it.

Economics · Epistemology · Positive economics · Economic Theory and Institutions · Philosophy · Psychology

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