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A Reason for Quantity Regulation

Author

Listed:
  • Glaeser, Edward Ludwig
  • Shleifer, Andrei

Abstract

Contrary to the standard economic advice, many regulations of financial intermediaries, as well as other regulations such as blue laws, fishing rules, zoning restrictions, or pollution controls, take the form of quantity controls rather than taxes. We argue that costs of enforcement are crucial to understanding these choices. When violations of quantity regulations are cheaper to discover than failures to pay taxes, the former can emerge as the optimal instrument for the government, even when it is less attractive in the absence of enforcement costs. This analysis is especially relevant to situations where private enforcement of regulations is crucial.

Suggested Citation

  • Glaeser, Edward Ludwig & Shleifer, Andrei, 2001. "A Reason for Quantity Regulation," Scholarly Articles 33078975, Harvard University Department of Economics.
    • Handle: RePEc:hrv:faseco:33078975
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    JEL classification:

    • L51 - Industrial Organization - - Regulation and Industrial Policy - - - Economics of Regulation
    • H30 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - General

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