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1. Introduction and Overview

My education in the political economy of regulation began when I auctioned off a one dollar bill for $25. The rules of the auction are simple, the results illustrative. The highest bidder receives the dollar, pays nothing; the second highest bidder must pay his bid but receives nothing; and all bidders are constrained to their budget. Try it sometime, the auction never fails to generate bids exceeding one dollar.1
Jason F. Shogren

2. Political Competition among Interest Groups

Let me start with a quotation familiar to some of you: “It is not from the benevolence of the butcher, the brewer, or the baker that we expect our dinner, but from their regard to their own interest.” The same author went on to say with some irony, “We are not ready to suspect any person of being defective in selfishness.” These are statements by Adam Smith, the founder of modern economics. The first statement is from the greatest book ever written on economics, called The Wealth of Nations, the second from a good book called The Theory of Moral Sentiments.
Gary S. Becker

3. Bootleggers and Baptists in the Market for Regulation

Regulation of individual behavior by higher authorities is as ancient as the Garden of Eden and as recent as yesterday’s Federal Register. Adam and Eve chaffed against the iron-clad specification standard they confronted, accepted the advice of an independent counselor, engaged in noncompliance activities, and suffered the consequences. They were required to leave a pristine environment where entry was barred and move to a significantly deteriorated competitive location where labor productivity was lower and future regulations would be crafted by their fellow man.
Bruce Yandle

4. Partial Regulation of Natural Monopoly

A substantial body of economic research over the past decade or so has been directed at the regulation of natural monopolies. Indeed the very definition of natural monopoly has been updated. Baumol (1977) equated natural monopoly with a firm whose cost function is subadditive over the relevant region of production. He then developed cost concepts for multi-product firms that allow a better understanding of the conditions that give rise to natural monopoly. Panzar and Willig (1977) studied the sustainability of a firm; that is, can a firm charge prices for its outputs that will thwart competitive entry. And Baumol, Panzar and Willig (1982) introduced contestability, a measure of the ease with which new firms can enter an industry. The work of these authors and others has led to a reevaluation of the market and technological conditions that justify when a natural monopoly should or should not be regulated.2
John Tschirhart

5. The Political Economy of Risk Communication Policies for Food and Alcoholic Beverages

The 1980s have witnessed the emergence of hazard warning policies as a major component in efforts to promote product safety and job safety. Government agencies have launched sweeping efforts to label all carcinogenic risks in the workplace as well as to promote labeling for a wide variety of consumer products. In an extreme case, the state of California has promulgated regulations that hazard warnings be given for all significant exposures to carcinogens and reproductive toxicants generated by exposures to food, environmental conditions, and conditions at the workplace. Whereas the regulatory efforts of the 1970s focused primarily on technological solutions and engineering controls to safety problems, in the 1980s there has been a dramatic shift toward the increased use of warnings. The objective has been to augment technological controls with precautionary behavior on the part of the individuals exposed to the risks.
W. Kip Viscusi

6. Economic Prescriptions for Environmental Problems: Not Exactly What the Doctor Ordered

It is not easy to sit in an ivory tower and think of ways to help solve the world’s environmental problems. As one who frequently engages in this exercise, I can attest to this fact. One of the dangers with ivory tower theorizing is that it is easy to lose sight of the actual problems that need to be solved, and the range of potential solutions. In my view, this loss of sight has become increasingly evident in the theoretical structure underlying environmental economics, which often emphasizes elegance at the expense of realism.
Robert W. Hahn

7. Disclosure, Consent, and Environmental Risk Regulation

The regulatory apparatus for controlling environmental risks is designed primarily to identify safe exposure thresholds and enforce controls based on that standard.
F. Reed Johnson


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