Advances in New Institutional Analysis series
Edited by Claude Ménard and Michel Ghertman
Chapter 15: The Puzzle of Regulation, Deregulation and Reregulation
Michel Ghertman INTRODUCTION Regulation of industries in its modern form has existed for over a century. It has roots in the commissioning of particular economic activities like stagecoach transport, maritime commerce or collecting tax levies by European monarchs since the Renaissance and before. The history of regulatory privileges and actions of Emperors, Kings and Princes is much longer than the history of regulation and deregulation in more or less democratic republics. This benign observation has important theoritical implications. It puts regulation/deregulation/re-regulation under the lenses of multidisciplinary inquiries. Attempting to explain royal fiat solely by economic efficiency considerations is likely to miss crucial sociocultural and political determinants. When putting this issue in a historical and international perspective, there is advantage in mobilizing the complementary contributions of political science and sociology, on top of economics, law and organization. Unfortunately, theoritical and empirical efforts have largely been undertaken separately by each social science discipline while the topic would benefit from an integrated treatment. Regulation and deregulation have been analyzed almost exclusively by economists. This chapter attempts to answer the following puzzle: ‘How can each change from less to more regulation or vice versa be explained?’ It starts with a review of selected economic theories pertaining to regulation/deregulation and continues with empirical findings. A research agenda largely based upon political science contributions and a discussion follow. ECONOMIC THEORIES PERTAINING TO REGULATION: EQUILIBRIA # 1, 2 AND 3 This review does not intend to be exhaustive (see Peltzman, 1989; Joskow and Rose, 1989; Noll,...
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