Regulation, Deregulation, Reregulation
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Regulation, Deregulation, Reregulation

Institutional Perspectives

Edited by Claude Ménard and Michel Ghertman

Building on Oliver Williamson’s original analysis, the contributors introduce new ideas, different perspectives and provide tools for better understanding changes in the approach to regulation, the reform of public utilities, and the complex problems of governance. They draw largely upon a transaction cost approach, highlighting the challenges faced by major economic sectors and identifying critical flaws in prevailing views on regulation. Deeply rooted in sector analysis, the book conveys a central message of new institutional economics: that theory should be continuously confronted by facts, and reformed or revolutionized accordingly.
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Chapter 15: The Puzzle of Regulation, Deregulation and Reregulation

Michel Ghertman


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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