Term
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Definition
| rules administered by a government agency to influence economic activity by determining prices, product standards, and types and conditions under which new firms can enter |
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Term
| Regulation takes place through a ______ that is relatively _____ and allows participation by _______ |
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Definition
public process
open
interested parties |
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Term
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Definition
1877-ICC
1930-agencies etablished to regulate power, communications, securities, and banking
1970s-agencies regulate copyright and energy
1980s-1990s-deregulation (process of removing restrictions on prices, product standards, and entry condition) |
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Term
| Constitutional Basis for Regulation |
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Definition
| common law, 5th amendment, and 14th amendment |
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Term
| Article 1, Section 1 of Constution |
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Definition
| Grants Congress the sole power to enact laws but does not authorize Congress to delegate policymaking to agencies |
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Term
| 1946-COngress enacted the APA |
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Definition
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Term
| APA grants parties right to sue for judicial review of an agency action |
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Definition
| under the framework of procedural due process |
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Term
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Definition
| agency actions not be arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law |
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Term
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Definition
| regulatory intervention occurs in the interest of the public at large |
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Term
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Definition
| regulatory intervention is the result of individual powerful interest groups exerting pressure on politicians and regulators to captrue rents at the expense of more dispersed groups |
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Term
| Public interest Theory 4 advantages |
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Definition
insure competition
impact externalities
stabilize economy
Introduce social objectives ineconomic policies |
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Term
| Under natural monopoly productive efficiency suggests... |
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Definition
| we should have one firm and P=MC but this does not happen in an unconstrained market. This failure, along with general need for mechanisms of regular public disclosure by buesiness |
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Term
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Definition
| this circumstance we should have regulation in order to correct market failure and improve social welfare |
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Term
| Stigler argues that (3 things) |
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Definition
firms will lobby legislators for regulation when such regulation provides
1. direct monetary subsidies
2. constraints on substitute products or subsidies on complementary products
3. easier price fixing/collusive atmosphere
4. incumbent firms with the ability to control entry by potential new rivals |
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Term
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Definition
| firms capture the regulatory process because each firm has a lot at stake. WHile the public as a whole has a lot at stake, any one person has only a very small stake and so has little incentive to invest resources in affecting regulatory process. Firms have incentive and opportunity to successfully invest resources in lobbying for favorable regulation |
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Term
| Economic theory of regulation |
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Definition
| improvement of capture theory. Various groups, consumers, etc, compete against each other in the political arena to increase their income and wealth to achieve other objectives |
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Term
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Definition
| are rational in choosing actions that are utility maximizing |
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