8/18/2004

regulations

A comment on the: Economic foundations of law
http://www.marginalrevolution.com/marginalrevolution/2004/08/economic_founda.html#more

Regulation jutifications:

1) Regularity -- There may be some situations where the "bother" of
negotiating every Nit of a contract are not worth it.

2) Delayed danger -- It may be that a regulation is justified because it
prevents a danger that is not evident or easily known

3) Dis-Economies -- We all know this

4) Mass Production -- It may be that a regulation is justified because
it leads to a cost effective solution where as individual cost/benefits
don't

See below for more detail and add comments if you want.

3 Comments:

Blogger Mike Liveright said...

Details, sent to: Alex Tabarrok

Thanks for: Economic foundations of law

http://www.marginalrevolution.com/marginalrevolution/2004/08/economic_founda.html#more

You make a good case for the lack of regulations. On the other hand I wonder if there are some other cases that could lead to a reason for regulations?


1) Regularity -- There may be some situations where the "bother" of negotiating every Nit of a contract are not worth it. -- If every time I rent a new place I have to negotiate if there is electricity available, whether I need to buy my own keys, ... then the cost of this, both in my time and indecision may be more than the cost of having more uniformity. I am not trying to be an extremist, or that my examples are correct, but argue that some standardization may be beneficial, and the rest of my cases will be similarly measured.

2) Delayed danger -- It may be that a regulation is justified because it prevents a danger that is not evident or easily known. -- I would prefer that all "aspirin" be reasonably safely made and not have to learn after I was dead, or others were that I could sue the maker or decide to purchase another brand.

3) Dis-Economies -- We all know this -- I might be that hot water reduces the incidence of small pox (because of de-activation of the germ --A stretch, but of course I'm sure that other more reasonable cases exist) --A regulation may be required to cause social goods that are not directly valuable enough to be individually cost effective.

4) Mass Production -- It may be that a regulation is justified because it leads to a cost effective solution where as individual cost/benefits don't -- One, possible example of this is seat belts -- If only a few are installed, then they cost "an arm and a leg", and thus not justified, where as if they required, their cost may be such that they are economic.


I expect that there are other reasons that one might want to consider regulations and that I'd argue that one should consider some balance between a fully regulated, standardized, un-economical society, and a totally un-regulated, perhaps un tort-lawyer-ed, economic society.

2:27 PM  
Blogger Mike Liveright said...

Also see: @ Matthew Yglesias's Blog and comments, -- Staff Writer at The American Prospect where he was previously a Writing Fellow

2:39 PM  
Blogger Mike Liveright said...

Also see: @ Matthew Yglesias's Blog and comments, -- Staff Writer at The American Prospect where he was previously a Writing Fellow

2:39 PM  

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