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1994 | Buch

Introduction: Governments and the Marketplace in Economic Analysis Kapitel lesen Erstes Kapitel lesen

Regulation and Economic Analysis

A Critique over Two Centuries

verfasst von: Richard L. Gordon

Verlag: Springer US

Buchreihe : Topics in Regulatory Economics and Policy

Enthalten in: Professional Book Archive

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Über dieses Buch

Regulation and Economic Analysis: A Critique Over Two Centuries argues that long experience with the practice of regulation creates a broad anti-intervention consensus among economists. This consensus is based on comparison of real intervention to real markets rather than an ideological preconception. It is shown that economic theory can support all possible positions on intervention. Much theory is too abstract to support any policy position; many arguments about how intervention might help contain qualifications expressing doubts about whether the potential can be realized; many theories illustrate the drawbacks of intervention. The vast literature on these issues concentrates either on specific cases or polemics that exaggerate both sides of the argument.
Regulation and Economic Analysis seeks to show the depth of the discontent, develop interpretations of economic theory that follow from skepticism about statism and provide selected illustrations. The discussion begins with examination of general equilibrium theory and proceeds to discuss market failure with stress on monopoly and particularly what is deemed excessive concern with predatory behavior. International trade issues, transaction costs, property rights, economic theories of government, the role of special institutions such as contracts, the defects of macroeconomic and equity arguments for regulating individual markets, environmental economics and the defects of public land management policies are examined.

Inhaltsverzeichnis

Frontmatter
Chapter 1. Introduction: Governments and the Marketplace in Economic Analysis
Abstract
As the deficiencies of intervention became more evident during the 1970s, criticism of the excesses of government in the leading industrialized economies became more fashionable. The traditional economic concern with excesses of government received more attention in policy debates. Economists led the attack.
Richard L. Gordon
Chapter 2. Choices in a Market Economy: A Prologue
Abstract
Modern economics uses an abstract general model of an idealized economy as the starting point of analysis. The theory is extended to introduce numerous complications and then combined with observation of experience to produce practical conclusions. Perversely, the basics are much harder to make comprehensible than are the extensions. For the numerous extended discussions, examine the texts devoted to theory. However, comments to suggest the practical relevance of the theory seem necessary here. The basic points are critical and badly abused in many ways. Balanced assessment of the contribution of the central theories is rare. All sides worry too much about what simple theory cannot do. The great contributions made are neglected. Even those familiar with the analysis should reexamine the problems.
Richard L. Gordon
Chapter 3. An Introduction to Market Failures
Abstract
This chapter deals with the market failure complications neglected in the simplified model presented in chapter 2. An overview is given first, and then issues related to specific market failures are discussed. The discussion employs the proposition more fully developed in chapter 6 that the market failure argument neglects the difficulties of implementation. These problems are clear enough that they can be sensed before the full criticism is presented.
Richard L. Gordon
Chapter 4. Further Problems of Analyzing and Treating Monopoly
Abstract
Concern about monopoly has long influenced the theory and practice of economic policy. The debates center on what must be done to ensure a competitive economy. The optimistic view is that competitive forces are so strong that all that is necessary is to prevent the government from imposing barriers. It is warned that many government policies claiming to promote competition actually increase inefficiency. The contrary view is that monopolistic forces are so extensive that massive governmental control efforts are needed.
Richard L. Gordon
Chapter 5. International Trade Policy Issues
Abstract
Another widely supported major point of Adam Smith is that international division of labor is as desirable as intranational specialization. Chapter 2 indicated that much international trade economics demonstrates that the principles of economic efficiency are independent of whether or not the dealings take place across borders.
Richard L. Gordon
Chapter 6. Transaction Costs, Property Rights, and the Limits of Government
Abstract
This chapter examines arguments used to contend government failure is a more serious problem than market failure. The review starts by examining transaction costs, the expenses of organizing and participating in a market or implementing a government policy. The principle of property rights is then sketched. The transaction-costs analyses of Coase, Stigler, and Williamson are reviewed in more detail. The goal is to show how transaction costs and property right economies imply drawbacks to reliance on government. Attention then shifts to two examples of direct attacks on intervention--the debate in the years between the two world wars on the possibility of an efficient planned economy and the newer economic theories of political behavior.
Richard L. Gordon
Chapter 7. Optimum Economic Organization: The Efficiency of Firms and Its Implications for Public Policy
Abstract
This chapter shows how the private sector responds to complexity. First, firms and industries select the organizational structure most conducive to efficiency. Similarly, the most efficient of the available methods of transacting are employed. The textbook auction market is often replaced by direct dealing with customers. Better methods of financing are sought. Contracts are used to stabilize relations. When a product cannot be satisfactorily secured from outsiders, the firm may decide to integrate vertically.
Richard L. Gordon
Chapter 8. Market Regulation and Macroeconomics Problems
Abstract
At least since the 1930s, some economists have argued that imperfections of competition caused economic instability from unemployment and inflation. A few added that policies to reduce these imperfections were the most satisfactory cure. The first part of the argument became widely accepted, but the policy conclusions have commanded little acceptance among specialists in economic instability.
Richard L. Gordon
Chapter 9. Notes on Fairness and the Market Economy
Abstract
The discussion begins with examination of why the problem of defining and attaining a fair outcome is intractable. Then it is argued that whatever income redistribution goals may be adopted, regulation of markets is a poor way to attain them. Since this book stresses regulation of markets, the second point is more critical here. The argument starts by recognizing the absence of clear rules of fairness. Ethical issues that have remained unresolved though millennia of effort are involved. The facts about prevailing conditions and the impacts of alternative policies are difficult and perhaps impossible to determine. Throughout, it is presumed that this view of income distribution dominates the economic literature.
Richard L. Gordon
Chapter 10. Problems of Environmental Impacts and Regulating Business Practices
Abstract
At least since the widely cited but now hopelessly old-fashioned treatise by Pigou, economists have examined the problem of the unintended side effects or externalities associated with economic activity. Environmental damages were a classic example of side effects. Therefore, economists had a well-developed theory of environmental issues before the burst of concern over the subject started around the 1960s. What was lacking was sufficient interest to inspire elaboration and application, a deficiency that rapidly was overcome during the 1970s.
Richard L. Gordon
Chapter 11. Land Policy as a Case Study in Excess Intervention
Abstract
Chapter 6 stressed the importance of well-defined, securely protected property rights to ensuring efficient markets. Efficient private resource use depends upon the unambiguous granting to one entity of the right to use land and other resources. The experience viewed here suggests that attaining and maintaining private ownership too often is unjustifiably restricted. The efficiency of markets, in turn, affects the optimality of land law.
Richard L. Gordon
Chapter 12. The Critiques of Intervention Reconsidered
Abstract
Extensive criticisms of government regulation have appeared in the economics literature for more than two centuries. Economics as a formal discipline began in the eighteenth century as an attack on ill-advised controls. Ever since, traditional economics has stressed the desirability of fostering competition and limiting government interference, particularly in the markets for individual commodities. The fervor for free markets of the century after Adam Smith eventually weakened and many commentators turned to stress market imperfections. The tradition of skepticism about government, nevertheless, remains a powerful force in economic analyses. The classic arguments of Hume, Smith, and their successors, therefore, have proved among the most valuable and enduring contributions to human knowledge. The need to reform ill-advised government policies remains the area over which the greatest consensus exists in the economics literature.
Richard L. Gordon
Chapter 13. Conclusions
Abstract
Excessive intervention remains the primary defect of policy making. Noneconomists have strong interventionist instincts. Democratic governments too often think that their restraint is sufficient to avoid error. The evidence refutes this.
Richard L. Gordon
Backmatter
Metadaten
Titel
Regulation and Economic Analysis
verfasst von
Richard L. Gordon
Copyright-Jahr
1994
Verlag
Springer US
Electronic ISBN
978-1-4615-2620-9
Print ISBN
978-1-4613-6123-7
DOI
https://doi.org/10.1007/978-1-4615-2620-9