File2-page25 - Economic theories of regulation: 1. Public...

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Djankov et al. (2002) Regulation and Development Prediction: entry regulation socially superior outcomes 2. Public Choice Theory of Regulation a) Capture version: Industry Incumbents capture regulation to keep out competitors and create rents (profts) For themselves Prediction: regulation social inFerior outcomes (market power, incumbent’s profts) a) Toolbooth version: Politician use regulation to create rents (extracted through campaign contributions, votes, bribes) Prediction: regulation social inFerior outcomes (corruption) Djankov et al. (2002) - The Regulation Of Entry Questions: What are the consequences oF the regulation oF entry? Which kind oF governments regulate entry?
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Unformatted text preview: Economic theories of regulation: 1. Public Interest . .. more representative governments entry regulations 2. Public Choice ... less representative governments entry regulations a) Capture version: ... to beneFt the incumbent Frms b) Toolbooth: ... to beneFts themselves Data: Papers uses new data set on entry regulation (no. oF procedures, time, cost) in 85 countries Findings: Stricter regulation oF entry is not associated with higher quality prod-ucts, better pollution records or health outcomes or keener competi-tion Development Economics, LSE Summer School 2007 22...
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