Theories of Regulation

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Theories of Regulation

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Why Need for Government Intervention?

• Distributional Inequities (distributive justice,
  health safety rights)
• Public Goods Externalities
• Decreasing Marginal Costs (Natural Monopoly)
• Market Imperfections, i.e. lack of access to
  information by consumers

Examples?
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Forms Organization of Regulation

• Price/Rate Regulation
• Standard Setting
• Licensing/Permitting
• Information Disclosure
• Economic Incentives (or desincentives)
• Marketable Property Rights

Examples?
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Governing Legal Forces

• Federal Level
• State Level
• Local Level
• Self-regulation

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Examples of Fed. Regulatory Agencies

• Federal Trade Commission FTC...Governs commerce
• Federal Communications Commission FCC Governs the
  airwaves...Howard Stern etc.
• Food Drug Administration FDA...Governs new
  labeling law etc.
• Bureau of Alcohol and Tobacco ATF...Recent
  conflict with the marketers of ice beer focusing
  on alcohol content.

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Antitrust Acts

• Sherman Act (1890) Competition...restraining
  trade and monopolizing markets
• Clayton Act (1914) Competition...limit specific
  activities, price discrimination, tying/exclusive
  agreements etc.
• Federal Trade Commission Act (1914) Created FTC
  Competition
• Robinson-Patman Act (1936) Competition
• Celler-Kefauver Act (1950) Competition...acquisiti
  on of competitors shares if...

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Consumer Protection - Acts

• Wheeler-Lea Act (1938) Consumer
  Protection...unfair and deceptive acts
• Consumer Goods Pricing Act (1975)
  Competition...price maintenance among mf. and
  resellers
• Trademark Counterfeiting Act (1980) Consumer
  protection, counterfeit goods
• Nutritional Labeling and Education Act (1990)
  Consumer protection...health claims, labeling May
  1994, marketers had to follow new guidelines for
  explaining the contents of products on labels
• Juice drinks...specify actual juice content