A Research Agenda for New Institutional Economics
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A Research Agenda for New Institutional Economics

Edited by Claude Ménard and Mary M. Shirley

Consisting of 30 concise chapters written by top scholars, this Research Agenda probes the knowledge frontiers of issues long at the forefront of New Institutional Economics (NIE), including government, contracts and property rights. It examines pressing research questions surrounding norms, culture, and beliefs. It is designed to inform and inspire students and those starting their careers in economics, law and political science. Well-established scholars will also find the book invaluable in updating their understanding of crucial research questions and seeking new areas to explore.
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Chapter 4: Evaluating the performance of regulations and regulatory institutions

Joseph E. Aldy

Abstract

Regulations represent the primary tool for governments to remedy market failures. The modern administrative state has established a set of institutions – regulatory governance – that shape, constrain, and guide regulators in the development of such regulations. Requiring transparent analyses of the benefits and costs of proposed rules and subjecting them to public comment and legislative review can address a number of pitfalls in political markets, including regulatory capture and principal–agent problems as regulators attempt to implement the will of the public, the legislature, and/or the executive. New Institutional Economics frameworks and tools provide the means for evaluating the impacts of regulations and the impacts of regulatory governance on policy-relevant outcomes. This chapter highlights five areas where future research could further illuminate the role of institutions in influencing government’s efforts in correcting market failures: (1) prospective benefit–cost analyses; (2) ad hoc retrospective analyses; (3) 1-in/X-out regulatory cost budgets; (4) cumulative regulatory costs; and (5) non-regulatory contexts.

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