Tools of the Trade
Edited by Scott Farrow
Chapter 6: Benefit-cost analysis and US regulatory review: Finding a market failure
In this chapter, students learn how benefit-cost analysis (BCA) is applied to US regulation. Students gain an overview of the federal regulatory process and the important role BCA plays in making regulatory policy. The chapter reviews how markets work in order to introduce the concept “market failure,” which agencies are required to identify to justify government regulation. Students should also gain an appreciation of possible government failures as well.
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