Legal rules may be general (that is, applicable to a broad range of situations) or specific. Adopting a custom-tailored rule for a specific activity permits the regulator to make efficient use of information about the social costs and benefits of that activity. However, the rule maker typically relies on the regulated parties for such information. The regulated parties may attempt to influence the rule maker, producing rules that reflect their private interests. We show that in some cases limiting the rule maker to a single rule for multiple activities will moderate this influence and maximize welfare.
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Paper provided by EconWPA in its series Law and Economics with number
0408001.
Find related papers by JEL classification: D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Models of Political Processes: Rent-seeking, Elections, Legislatures, and Voting Behavior H11 - Public Economics - - Structure and Scope of Government - - - Structure and Scope of Government K00 - Law and Economics - - General - - - General (including Data Sources and Description) K23 - Law and Economics - - Regulation and Business Law - - - Regulated Industries and Administrative Law K20 - Law and Economics - - Regulation and Business Law - - - General K14 - Law and Economics - - Basic Areas of Law - - - Criminal Law K4 - Law and Economics - - Legal Procedure, the Legal System, and Illegal Behavior L5 - Industrial Organization - - Regulation and Industrial Policy
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