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Government and Markets : Toward a New Theory of Regulation.

By: Contributor(s): Material type: TextPublisher: New York : Cambridge University Press, 2009Copyright date: ©2009Edition: 1st edDescription: 1 online resource (577 pages)Content type:
  • text
Media type:
  • computer
Carrier type:
  • online resource
ISBN:
  • 9780511656576
Subject(s): Genre/Form: DDC classification:
  • 381.301
Online resources:
Contents:
Cover -- Half-title -- Title -- Copyright -- Contents -- Acknowledgments -- Contributors -- Introduction -- Touchstones of the Prevailing View -- Toward a New View -- Beyond Market Failure -- Beyond the Economic Theory of Politics -- Beyond Command and Control -- A New Agenda for Research -- Section One Beyond Market Failure -- One Government Failure vs. Market Failure: Principles of Regulation -- I. The General Theory of Regulation -- a. The Need for Government Intervention -- i. Conventional Market Failures -- ii. Irrationality -- iii. Distributive Justice -- b. Regulations vs. Other Forms of Intervention -- i. Imperfect Information and Incomplete Contracting -- ii. Prices vs. Quantities -- II. Instruments of Regulation -- a. Disclosure -- b. Restrictions -- c. Mandates -- d. Ownership Restrictions -- e. Regulatory Takings -- f. Laws and Regulations -- i. Regulatory Processes -- ii. Implementation of Regulations -- g. Government Failures -- III. Applications -- a. Sovereign Wealth Funds: Does Ownership Matter? -- b. Financial Sector Regulation -- i. Consumer Protection -- ii. Safety and Soundness -- iii. Ensuring Access -- iv. Macrostability -- c. Greenhouse Gas Emissions -- IV. Elements of a Research Agenda -- Concluding Remarks -- Two Effective Regulation through Credible Cost-Benefit Analysis: The Opportunity Costs of Superfund -- I. Introduction -- II. An Abridged Cost-Benefit Analysis of the Superfund Program -- A. The Superfund Program and a New Research Design -- 1. History and Broad Program Goals -- 2. Site Assessment &amp -- Superfund Clean-Ups Processes -- 3. 1982 HRS Scores as the Basis of a New Research Design -- B. Economic Theory as a Guide -- C. Costs and Other Background Information on Superfund Clean-Ups -- D. The Impact of Superfund Clean-Ups on Housing Prices -- 1. Econometric Approach -- 2. Results -- 3. Interpretation.
E. The Impact of Superfund Clean-Ups on Infant Health -- 1. Why Focus on Infants? -- 2. Econometric Approach -- 3. Results -- F. Does Superfund Pass a Cost-Benefit Test? -- III. Implications -- Data Appendix -- I. Covariates in Housing Price and Rental Rate Regressions -- II. Assignment of HRS Scores and their Role in the Determination of the NPL -- III. Primary Samples of Hazardous Waste Sites -- A. All NPL Sample -- B. 1982 HRS Sample -- IV. Matching of 2000 Census Tracts to 1980 and 1990 Censuses -- V. Neighbor Samples -- References -- Three From "State Interference" to the "Return of the Market": The Rhetoric of Economic Regulation from the Old Gilded Age to the New -- Limits of Competition Rhetoric in the Making of Statist New Liberalism -- From the Moral Plane to Social Costs -- From Administered Prices to National Planning -- From New Deal Planning to the New Serfdom -- From the Great Society to Deregulation and the Return to the Market -- Four Lessons from Europe: Some Reflections on the European Union and the Regulation of Business -- The Evolution of the EU -- Relationships between Regulators and Regulated Industries -- Dominant Regulatory Strategies in Europe -- The Interplay of Regulatory Policy and Social Welfare Policies -- Implications for Future Regulation in the United States -- Conclusion -- Five Confidence Games: How Does Regulation Constitute Markets? -- I. The Republican Origins of Regulatory Institutions -- II. Credence Goods and Placebo Economies -- III. Approval Regulation Institutions Induce Markets with Higher Rates of Experimentation and Superior Product Quality -- IV. Improvements in Human Welfare and Liberty -- V. Research Agendas -- A. Formal and Mathematical Research Agendas -- B. Empirical and Policy Research Agendas - the Case of the Drug Efficacy Study -- C. Historical Research Agendas -- Conclusion -- References.
Section Two: Beyond the Economic Theory of Politics -- Six The End of Special Interests Theory and the Beginning of a More Positive View of Democratic Politics -- I. Rationality -- II. Empirics -- III. Diffuse Versus Concentrated Interests -- IV. Pork-Barrel Politics and Special Interest Committees -- V. Politicians Trade Off Good Policy for Campaign Donations -- VI. Competition -- VII. Irrationality -- VIII. Toward a More Positive Positive Theory of Regulation -- Bibliography -- Seven Public Choice: A Critical Reassessment -- Introduction -- Origins of Public Choice -- The Dominance of Public Choice -- Mechanisms of Collective Choice -- Interest Groups, Legislators, and Regulators -- Voters and Rational Ignorance -- The State and the Market -- Criticisms of Public Choice -- Maximizing What? -- Deconstructing Capture -- Empirical Weaknesses -- A Response to Skeptics -- Conclusion -- References -- Eight The Paranoid Style in the Study of American Politics -- Wrestling with Ghosts? -- Three Major Cases -- The Voting Rights Act of 1965 -- Selma and its Consequences -- Capturing the Public -- Medicare, 1965 -- Background: Failed Campaigns for Public Health Insurance, 1915-1950 -- Targeting Public Health Insurance for the Elderly -- Well-Organized Opposition from the American Medical Association -- Organized Support for Medicare -- Sorting Out the Evidence on Influence: Special Interests or General Interest? -- Superfund, 1980 -- Context: Growing Environmental Awareness and a Rising Federal Role -- Political Transformation: Love Canal and the Power of the Press -- The CMA: From Offense to Defense -- Finding Consensus in Congress -- The Legacy of Love Canal -- Interests, Information, and Democracy -- Nine Law, Policy, and Cooperation -- Introduction -- A. An Emerging Literature on Cooperation -- B. Design Levers for Cooperative Dynamics -- Communication.
Factors Affecting Intrinsic Motivation -- Solidarity and HumanizationEmpathy -- Trust and Fairness -- Norms: Intrinsic and Extrinsic -- Efficacy -- Factors Affecting Extrinsic Motivation -- Punishment and Reward -- TransparencyReputation -- Cost -- Crowding Out -- Exit and Entry -- LeadershipAsymmetric Contribution -- C. Law and Policy: Examples of Cooperative Systems Design -- Conclusion -- Section Three: Beyond Command and Control -- Ten What Opportunity Is Knocking? Regulating Corporate Governance in the United States -- I. Introduction -- II. The Momentum behind Regulatory Reform -- III. The Leading Diagnoses of the Problems of U.S. Corporate Governance -- IV. Shareholder Value as the Dominant Ideology of Corporate Governance -- V. The Intellectual Challenges of Corporate Governance Reform -- VI. Conclusion -- References -- Eleven Taxation as a Regulatory Tool: Lessons from Environmental Taxes in Europe -- I. Introduction -- II. Do Taxes Discourage Behavior? -- III. When Do Taxes Discourage Behavior? A Framework for Decision Making -- (1) Regulatory Taxes and the Firm -- (2) Regulatory Taxes and the State -- (3) Regulatory Taxes and Ethical Motivation -- IV. Denmarks Green Taxes -- Environmental Taxes and Danish Firms -- Environmental Taxes and the Danish State -- Environmental Taxes and Ethical Motivation -- V. Lessons for the United States -- References -- Twelve Redesigning Regulation: A Case Study from the Consumer Credit Market -- The Problem with Going It Alone -- Personal Responsibility and Regulation -- Solutions That Made the Problem Worse -- The Dangerous Helper -- The Disclosure Hoax -- Designing Better Regulation: Lessons from Consumer Credit -- Scattered Fence Posts Dont Make a Fence -- Every Trip to the Legislature Is Costly -- Markets Innovate, but Statutes Remain Frozen in Time -- Legislators Are Not Experts.
Without Regulation, Consumers Have Little Structural Protection -- Divided Goals Leave Consumers in Second Place -- Whats Bad for Consumers Can Be Bad for Business as Well -- A New Approach: Financial Products Safety Commission -- The Next Step: A Research Agenda -- Conclusion -- Thirteen Origins and Regulatory Consequences of the Subprime Crisis -- I. Roots of the Crisis: The Originate and Distribute Model -- II. Agency Problems in the Mortgage Broking Industry -- III. Capital Inadequacy -- IV. Problems with Stress Testing -- V. Illusive Liquidity -- VI. Reforming the Rating Agencies -- VII. The Role of Hedge Funds -- VIII. SIVs and Conduits -- IX. Transparency -- X. Exchange-Based versus Over-the-Counter Trading -- XI. Is There a Case for Consolidated Supervision? -- XII. Implications for Regulatory Reform -- References -- Fourteen The Prospects for Effective Coregulation in the United States: A Historians View from the Early Twenty-First Century -- Conceptualizing Private Regulation -- The Turn to Private Governance -- The Theoretical Underpinnings of Nongovernmental Regulation -- Adaptability and Precision -- Coverage -- Focus on Problem Solving -- Facilitation of Cooperation -- Buy-in -- Self-Regulation as Smokescreen -- Private Regulatory Governance in Action: Lessons for Policymakers -- Fertile and Barren Ground for Nongovernmental Regulation -- The Centrality of Transparency and Accountability -- The Promise of Coregulation -- An Agenda for Future Research -- Fifteen Deregulation Theories in a Litigious Society: American Antitrust and Tort -- I. Adversarial Judicial Process in Antitrust and Mass Tort Private Actions -- II. Antitrust: Private and Government Actions -- III. Mass Tort Litigation -- IV. Outcomes Assessment -- Conclusion.
Sixteen Markets in the Shadow of the State: An Appraisal of Deregulation and Implications for Future Research.
Summary: This interdisciplinary volume points the way toward the modernization of regulatory theory. Its essays by leading scholars move past predominant approaches, integrating the latest research about the interplay between human behavior, societal needs and regulatory institutions. The book concludes by setting out a potential research agenda for the social sciences.
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Cover -- Half-title -- Title -- Copyright -- Contents -- Acknowledgments -- Contributors -- Introduction -- Touchstones of the Prevailing View -- Toward a New View -- Beyond Market Failure -- Beyond the Economic Theory of Politics -- Beyond Command and Control -- A New Agenda for Research -- Section One Beyond Market Failure -- One Government Failure vs. Market Failure: Principles of Regulation -- I. The General Theory of Regulation -- a. The Need for Government Intervention -- i. Conventional Market Failures -- ii. Irrationality -- iii. Distributive Justice -- b. Regulations vs. Other Forms of Intervention -- i. Imperfect Information and Incomplete Contracting -- ii. Prices vs. Quantities -- II. Instruments of Regulation -- a. Disclosure -- b. Restrictions -- c. Mandates -- d. Ownership Restrictions -- e. Regulatory Takings -- f. Laws and Regulations -- i. Regulatory Processes -- ii. Implementation of Regulations -- g. Government Failures -- III. Applications -- a. Sovereign Wealth Funds: Does Ownership Matter? -- b. Financial Sector Regulation -- i. Consumer Protection -- ii. Safety and Soundness -- iii. Ensuring Access -- iv. Macrostability -- c. Greenhouse Gas Emissions -- IV. Elements of a Research Agenda -- Concluding Remarks -- Two Effective Regulation through Credible Cost-Benefit Analysis: The Opportunity Costs of Superfund -- I. Introduction -- II. An Abridged Cost-Benefit Analysis of the Superfund Program -- A. The Superfund Program and a New Research Design -- 1. History and Broad Program Goals -- 2. Site Assessment &amp -- Superfund Clean-Ups Processes -- 3. 1982 HRS Scores as the Basis of a New Research Design -- B. Economic Theory as a Guide -- C. Costs and Other Background Information on Superfund Clean-Ups -- D. The Impact of Superfund Clean-Ups on Housing Prices -- 1. Econometric Approach -- 2. Results -- 3. Interpretation.

E. The Impact of Superfund Clean-Ups on Infant Health -- 1. Why Focus on Infants? -- 2. Econometric Approach -- 3. Results -- F. Does Superfund Pass a Cost-Benefit Test? -- III. Implications -- Data Appendix -- I. Covariates in Housing Price and Rental Rate Regressions -- II. Assignment of HRS Scores and their Role in the Determination of the NPL -- III. Primary Samples of Hazardous Waste Sites -- A. All NPL Sample -- B. 1982 HRS Sample -- IV. Matching of 2000 Census Tracts to 1980 and 1990 Censuses -- V. Neighbor Samples -- References -- Three From "State Interference" to the "Return of the Market": The Rhetoric of Economic Regulation from the Old Gilded Age to the New -- Limits of Competition Rhetoric in the Making of Statist New Liberalism -- From the Moral Plane to Social Costs -- From Administered Prices to National Planning -- From New Deal Planning to the New Serfdom -- From the Great Society to Deregulation and the Return to the Market -- Four Lessons from Europe: Some Reflections on the European Union and the Regulation of Business -- The Evolution of the EU -- Relationships between Regulators and Regulated Industries -- Dominant Regulatory Strategies in Europe -- The Interplay of Regulatory Policy and Social Welfare Policies -- Implications for Future Regulation in the United States -- Conclusion -- Five Confidence Games: How Does Regulation Constitute Markets? -- I. The Republican Origins of Regulatory Institutions -- II. Credence Goods and Placebo Economies -- III. Approval Regulation Institutions Induce Markets with Higher Rates of Experimentation and Superior Product Quality -- IV. Improvements in Human Welfare and Liberty -- V. Research Agendas -- A. Formal and Mathematical Research Agendas -- B. Empirical and Policy Research Agendas - the Case of the Drug Efficacy Study -- C. Historical Research Agendas -- Conclusion -- References.

Section Two: Beyond the Economic Theory of Politics -- Six The End of Special Interests Theory and the Beginning of a More Positive View of Democratic Politics -- I. Rationality -- II. Empirics -- III. Diffuse Versus Concentrated Interests -- IV. Pork-Barrel Politics and Special Interest Committees -- V. Politicians Trade Off Good Policy for Campaign Donations -- VI. Competition -- VII. Irrationality -- VIII. Toward a More Positive Positive Theory of Regulation -- Bibliography -- Seven Public Choice: A Critical Reassessment -- Introduction -- Origins of Public Choice -- The Dominance of Public Choice -- Mechanisms of Collective Choice -- Interest Groups, Legislators, and Regulators -- Voters and Rational Ignorance -- The State and the Market -- Criticisms of Public Choice -- Maximizing What? -- Deconstructing Capture -- Empirical Weaknesses -- A Response to Skeptics -- Conclusion -- References -- Eight The Paranoid Style in the Study of American Politics -- Wrestling with Ghosts? -- Three Major Cases -- The Voting Rights Act of 1965 -- Selma and its Consequences -- Capturing the Public -- Medicare, 1965 -- Background: Failed Campaigns for Public Health Insurance, 1915-1950 -- Targeting Public Health Insurance for the Elderly -- Well-Organized Opposition from the American Medical Association -- Organized Support for Medicare -- Sorting Out the Evidence on Influence: Special Interests or General Interest? -- Superfund, 1980 -- Context: Growing Environmental Awareness and a Rising Federal Role -- Political Transformation: Love Canal and the Power of the Press -- The CMA: From Offense to Defense -- Finding Consensus in Congress -- The Legacy of Love Canal -- Interests, Information, and Democracy -- Nine Law, Policy, and Cooperation -- Introduction -- A. An Emerging Literature on Cooperation -- B. Design Levers for Cooperative Dynamics -- Communication.

Factors Affecting Intrinsic Motivation -- Solidarity and HumanizationEmpathy -- Trust and Fairness -- Norms: Intrinsic and Extrinsic -- Efficacy -- Factors Affecting Extrinsic Motivation -- Punishment and Reward -- TransparencyReputation -- Cost -- Crowding Out -- Exit and Entry -- LeadershipAsymmetric Contribution -- C. Law and Policy: Examples of Cooperative Systems Design -- Conclusion -- Section Three: Beyond Command and Control -- Ten What Opportunity Is Knocking? Regulating Corporate Governance in the United States -- I. Introduction -- II. The Momentum behind Regulatory Reform -- III. The Leading Diagnoses of the Problems of U.S. Corporate Governance -- IV. Shareholder Value as the Dominant Ideology of Corporate Governance -- V. The Intellectual Challenges of Corporate Governance Reform -- VI. Conclusion -- References -- Eleven Taxation as a Regulatory Tool: Lessons from Environmental Taxes in Europe -- I. Introduction -- II. Do Taxes Discourage Behavior? -- III. When Do Taxes Discourage Behavior? A Framework for Decision Making -- (1) Regulatory Taxes and the Firm -- (2) Regulatory Taxes and the State -- (3) Regulatory Taxes and Ethical Motivation -- IV. Denmarks Green Taxes -- Environmental Taxes and Danish Firms -- Environmental Taxes and the Danish State -- Environmental Taxes and Ethical Motivation -- V. Lessons for the United States -- References -- Twelve Redesigning Regulation: A Case Study from the Consumer Credit Market -- The Problem with Going It Alone -- Personal Responsibility and Regulation -- Solutions That Made the Problem Worse -- The Dangerous Helper -- The Disclosure Hoax -- Designing Better Regulation: Lessons from Consumer Credit -- Scattered Fence Posts Dont Make a Fence -- Every Trip to the Legislature Is Costly -- Markets Innovate, but Statutes Remain Frozen in Time -- Legislators Are Not Experts.

Without Regulation, Consumers Have Little Structural Protection -- Divided Goals Leave Consumers in Second Place -- Whats Bad for Consumers Can Be Bad for Business as Well -- A New Approach: Financial Products Safety Commission -- The Next Step: A Research Agenda -- Conclusion -- Thirteen Origins and Regulatory Consequences of the Subprime Crisis -- I. Roots of the Crisis: The Originate and Distribute Model -- II. Agency Problems in the Mortgage Broking Industry -- III. Capital Inadequacy -- IV. Problems with Stress Testing -- V. Illusive Liquidity -- VI. Reforming the Rating Agencies -- VII. The Role of Hedge Funds -- VIII. SIVs and Conduits -- IX. Transparency -- X. Exchange-Based versus Over-the-Counter Trading -- XI. Is There a Case for Consolidated Supervision? -- XII. Implications for Regulatory Reform -- References -- Fourteen The Prospects for Effective Coregulation in the United States: A Historians View from the Early Twenty-First Century -- Conceptualizing Private Regulation -- The Turn to Private Governance -- The Theoretical Underpinnings of Nongovernmental Regulation -- Adaptability and Precision -- Coverage -- Focus on Problem Solving -- Facilitation of Cooperation -- Buy-in -- Self-Regulation as Smokescreen -- Private Regulatory Governance in Action: Lessons for Policymakers -- Fertile and Barren Ground for Nongovernmental Regulation -- The Centrality of Transparency and Accountability -- The Promise of Coregulation -- An Agenda for Future Research -- Fifteen Deregulation Theories in a Litigious Society: American Antitrust and Tort -- I. Adversarial Judicial Process in Antitrust and Mass Tort Private Actions -- II. Antitrust: Private and Government Actions -- III. Mass Tort Litigation -- IV. Outcomes Assessment -- Conclusion.

Sixteen Markets in the Shadow of the State: An Appraisal of Deregulation and Implications for Future Research.

This interdisciplinary volume points the way toward the modernization of regulatory theory. Its essays by leading scholars move past predominant approaches, integrating the latest research about the interplay between human behavior, societal needs and regulatory institutions. The book concludes by setting out a potential research agenda for the social sciences.

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