Theories of Economic Regulation
Volume: Volume 5, No. 2
Issue: Autumn 1974
Pages: pp. 335-358
Authors: Richard A. Posner
Title: Theories of Economic Regulation
Abstract: Several theories have been advanced to explain the observed pattern of government regulation of the economy. These include the "public interest" theory and several versions, proposed either by political scientists or by economists, of the "interest group" or "capture" theory. This article analyzes those theories. It argues that the public interest theory and the political scientists' versions of the interest group theory are unacceptable in their present form. The economists' version of the interest group theory is discussed at greatest length; its theoretical and empirical foundations are reviewed, and the conclusion is reached that, while promising, the theory requires both more analytical development and new sorts of empirical investigation before it can be accepted as an adequate positive theory of regulation.
JEL Classification
Public Policy Towards Monopoly and Competition (6120)
Welfare Theory General (0240)