Class 10 Class 10 Regulation policy March 19 St-Petersburg State University Graduate School of...
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Transcript of Class 10 Class 10 Regulation policy March 19 St-Petersburg State University Graduate School of...
Class 10Class 10 Regulation policy
March 19
St-Petersburg State University Graduate School of Management
Master of International Business Program Business-government relations
??? Discussion questions
• The firm and regulatory environment. different types of regulation.
• Why regulate? Economic theory of regulation. Rationales for regulating.
• Regulatory strategies and instruments.
• Who regulates?
• Challenges of regulation in 21 century
Regulation
•
Macroeconomic regulation
(fiscal, monetary policy, social, trade policy)
Legislation (law-general regulation, discretional
regulation)
The FirmDirect or indirect impact
Regulation
– Rules administered by a government agency to influence economic activity by determining prices, product standards and types, and the conditions under which new firms can enter an industry.
– A form of secondary legislation which is used to implement a primary piece of legislation appropriately, or to take into account of particular circumstances or factors emerging during the gradual implementation of, or during the period of, a primary piece of legislation.
Why regulate?
A. “Public interest” explanations
1. Legislative declaration
2. Market failure
B. “Private interest” explanations
1. Regulation sought by the regulated.
2. Regulation sought by other interest groups
Economic theories of regulation
Two broad economic theories of regulation are:
• Public Interest Theory
– The public interest theory is that regulation seeks an efficient use of resources.
• Capture Theory
– Capture theory is that regulation helps producers to maximize economic profit.
Why regulate? Rationales for regulating
Monopolies and natural monopolies Externalities Information inadequacies Continuity and availability of service Anti-competitive and behaviour
predatory pricing
Regulation: set of interventions
Controlling prices Setting price floors Ensuring equal opportunities Regulating employment practices Specifying qualifications Providing for solvency Controlling the number of market
participants Limiting ownership
Regulation: set of interventions (cont)
Requiring premarketing approval Ensuring product safety Mandating product characteristics and
technology Establishing performance standards Controlling toxic emissions and other
pollutants Specifying industry boundaries Allocating public resources Rationing common pool resources …
Why regulate? Rationales for regulating.
Public goods Unequal bargaining power Scarcity and rationing Distribution justice and social policy Rationalization and coordination Planning
Regulatory strategies
Command and control
Self-regulation
Incentives
Market-harnessing controls
Competition laws
Franchising
Contracting
Tradable permits
Regulatory strategies
Disclosure
Direct action
Rights and liabilities laws
Public compensation / social insurance
Who regulates?
Self-regulators
Local authorities
Parliament
Courts and tribunals
Central government departments
Agencies
Directors general
Challenges for modern regulation policies
Over the past decades:
• The structure of modern industrial economies has changed
• Development of new industries and areas of business
• Deregulation process (fighting red tape and lowering administrative barriers)
• Privatization
• Globalization