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Efficient Regulation

Author

Listed:
  • Andrei Shleifer

Abstract

Regulation of economic activity is ubiquitous around the world, yet standard theories predict it should be rather uncommon. I argue that the ubiquity of regulation is explained not so much by the failure of markets, or by asymmetric information, as by the failure of courts to solve contract and tort disputes cheaply, predictably, and impartially. The approach accounts for the ubiquity of regulation, for its growth over time, as well as for the fact that contracts themselves are heavily regulated. It also makes predictions, both across activities and across jurisdictions, for the efficiency of regulation and litigation as strategies of enforcing efficient conduct.

Suggested Citation

  • Andrei Shleifer, 2010. "Efficient Regulation," NBER Working Papers 15651, National Bureau of Economic Research, Inc.
  • Handle: RePEc:nbr:nberwo:15651
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    File URL: http://www.nber.org/papers/w15651.pdf
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    Other versions of this item:

    • Andrei Shleifer, 2010. "Efficient Regulation," NBER Chapters,in: Regulation vs. Litigation: Perspectives from Economics and Law, pages 27-43 National Bureau of Economic Research, Inc.

    References listed on IDEAS

    as
    1. Edward Glaeser & Simon Johnson & Andrei Shleifer, 2001. "Coase Versus the Coasians," The Quarterly Journal of Economics, Oxford University Press, vol. 116(3), pages 853-899.
    2. Andrei Shleifer & Florencio Lopez-de-Silanes & Rafael La Porta, 2008. "The Economic Consequences of Legal Origins," Journal of Economic Literature, American Economic Association, vol. 46(2), pages 285-332, June.
    3. Edward L. Glaeser & Andrei Shleifer, 2003. "The Rise of the Regulatory State," Journal of Economic Literature, American Economic Association, vol. 41(2), pages 401-425, June.
    4. Gary S. Becker, 1974. "Crime and Punishment: An Economic Approach," NBER Chapters,in: Essays in the Economics of Crime and Punishment, pages 1-54 National Bureau of Economic Research, Inc.
    5. Nicola Gennaioli & Andrei Shleifer, 2007. "The Evolution of Common Law," Journal of Political Economy, University of Chicago Press, vol. 115, pages 43-68.
    6. Oliver Hart, 2009. "Regulation and Sarbanes-Oxley," Journal of Accounting Research, Wiley Blackwell, vol. 47(2), pages 437-445, May.
    7. Djankov, Simeon & Glaeser, Edward & La Porta, Rafael & Lopez-de-Silanes, Florencio & Shleifer, Andrei, 2003. "The new comparative economics," Journal of Comparative Economics, Elsevier, vol. 31(4), pages 595-619, December.
    8. Joshua Schwartzstein & Andrei Shleifer, 2013. "An Activity-Generating Theory of Regulation," Journal of Law and Economics, University of Chicago Press, vol. 56(1), pages 1-38.
    9. Philippe Aghion & Yann Algan & Pierre Cahuc & Andrei Shleifer, 2010. "Regulation and Distrust," The Quarterly Journal of Economics, Oxford University Press, vol. 125(3), pages 1015-1049.
    10. Anthony Niblett & Richard A. Posner & Andrei Shleifer, 2010. "The Evolution of a Legal Rule," The Journal of Legal Studies, University of Chicago Press, vol. 39(2), pages 325-358.
    11. repec:hrv:faseco:30747197 is not listed on IDEAS
    12. Giacomo A. M. Ponzetto & Patricio A. Fernandez, 2008. "Case Law versus Statute Law: An Evolutionary Comparison," The Journal of Legal Studies, University of Chicago Press, vol. 37(2), pages 379-430, June.
    13. repec:spo:wpecon:info:hdl:2441/8883 is not listed on IDEAS
    14. Casey B. Mulligan & Andrei Shleifer, 2005. "The Extent of the Market and the Supply of Regulation," The Quarterly Journal of Economics, Oxford University Press, vol. 120(4), pages 1445-1473.
    Full references (including those not matched with items on IDEAS)

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    Cited by:

    1. repec:eee:jeborg:v:150:y:2018:i:c:p:28-42 is not listed on IDEAS
    2. Skevas, Theodoros & Fevereiro, Pedro & Wesseler, Justus, 2010. "Coexistence regulations and agriculture production: A case study of five Bt maize producers in Portugal," Ecological Economics, Elsevier, vol. 69(12), pages 2402-2408, October.
    3. Hans Pitlik & Ludek Kouba, 2015. "Does social distrust always lead to a stronger support for government intervention?," Public Choice, Springer, vol. 163(3), pages 355-377, June.
    4. Boyer, Marcel & Porrini, Donatella, 2011. "The impact of court errors on liability sharing and safety regulation for environmental/industrial accidents," International Review of Law and Economics, Elsevier, vol. 31(1), pages 21-29, March.
    5. repec:eee:matsoc:v:92:y:2018:i:c:p:22-34 is not listed on IDEAS
    6. Magda Bianco & Giulio Napolitano, 2011. "The Italian Administrative System: Why a Source of Competitive Disadvantage?," Quaderni di storia economica (Economic History Working Papers) 24, Bank of Italy, Economic Research and International Relations Area.
    7. Cumming, Douglas & Knill, April & Richardson, Nela, 2015. "Firm size and the impact of securities regulation," Journal of Comparative Economics, Elsevier, vol. 43(2), pages 417-442.
    8. Donovan, John & Frankel, Richard & Lee, Joshua & Martin, Xiumin & Seo, Hojun, 2014. "Issues raised by studying DeFond and Zhang: What should audit researchers do?," Journal of Accounting and Economics, Elsevier, vol. 58(2), pages 327-338.

    More about this item

    JEL classification:

    • K12 - Law and Economics - - Basic Areas of Law - - - Contract Law
    • K13 - Law and Economics - - Basic Areas of Law - - - Tort Law and Product Liability; Forensic Economics
    • L51 - Industrial Organization - - Regulation and Industrial Policy - - - Economics of Regulation

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