THE POSSIBILITY AND IMPOSSIBILITY OF RATIONAL REGULATION IN GOVERNMENT

Year 2016, Volume: 8 Issue: 1, 226 - 240, 01.06.2016

Coşkun Can Aktan

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

regulation, cost of regulation

References

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