Economic Regulation

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Economic Regulation
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Introduction

• Economic, or "business" regulation is generally
  used to discuss the traditional regulatory areas.
  
• Public purpose is to protect economic interests
  of consumers from monopoly extractions. (e.g.,
  electric, gas utilities).
• Regulation often been imposed by IRCs (e.g. ICC,
  FCC) rather than executive agencies
• Raises two issues--accountability and capture.

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Occupational Regulation

• Approximately 1100 different occupations are
  regulated somewhere in the US.
• Often deals with qualification (law, medicine)
• Typically left to the states/local govt. -- a
  lot of variance
• Justification is to substitute for consumer
  ignorance (imperfect information)
• Often asked for by practitioners

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Regulatory Options

• Registration -- everybody who practices must
  register w/agency usually occurs w/out
  restriction.
• Certification -- agency gives exam or examines
  credentials and if individual passes, they can
  practice. Provides consumer with some insurance
  of competency.
• Licensing -- most restrictive once again must
  take an exam in order to be licensed, but those
  who are not licensed can not practice in the
  field.

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Regulatory Impacts

• Barriers to entry -- leads to reduction in supply
  of providers and increase in price.
• Nonsense requirements
• Examinations that lack validity
• Price Impacts -- raises prices of the service
• Quality Impacts -- regulation may improve service
• Miscellaneous -- restricts consumer choice

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Reform Options

• Deregulation.
• Certification
• All-Comers Exam
• Legal Remedies
• Institutional Licensing
• Public Representation
• Department of Consumer Affairs