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The Anatomy of Institutional and Organizational Failure

In: Obtaining the Best from Regulation and Competition

Author

Listed:
  • Karl A. McDermott

    (NERA)

  • Carl R. Peterson

    (NERA)

Abstract

CONCLUSIONS We have attempted to show that regulatory failures are products of institution designs where rigidities in the ability of the institutions to adapt to shocks lead to profound disappointment in the public’s expectations. The politically sensitive character of these essential services makes them ripe for instant reform. Kahn (1988, p.xxxvii) has pointed out we really don’t have a choice between perfect markets and perfect regulation as he admonished the “…central institutional issue of public utility regulation” remains the one that I identified at that time- finding the best possible mix of inevitably imperfect regulation and inevitably imperfect competition.” In selecting new institutions we need to learn from the lessons past and present that care in the design and implementation is critical. In restructuring efforts around the world today we still find rhetoric prevailing over analysis. There are still those who say all we need are property rights and everything else will fall into place. If there is one lesson to be learned from our regulatory history it is that there are no simple solutions, no silver bullets and no quick fixes.

Suggested Citation

  • Karl A. McDermott & Carl R. Peterson, 2005. "The Anatomy of Institutional and Organizational Failure," Topics in Regulatory Economics and Policy, in: Michel A. Crew & Michael A. Crew & Menahem Spiegel (ed.), Obtaining the Best from Regulation and Competition, chapter 0, pages 65-92, Springer.
    • Handle: RePEc:spr:topchp:978-0-387-23196-9_4
    DOI: 10.1007/0-387-23196-X_4
    as

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