Pacces, Alessio M. --- "An Introduction to the Law and Economics of Regulation" [2012] ELECD 432; in Van den Bergh, J. Roger; Pacces, M. Alessio (eds), "Regulation and Economics" (Edward Elgar Publishing, 2012)

Book Title: Regulation and Economics

Editor(s): Van den Bergh, J. Roger; Pacces, M. Alessio

Publisher: Edward Elgar Publishing

ISBN (hard cover): 9781847203434

Section Title: An Introduction to the Law and Economics of Regulation

Author(s): Pacces, Alessio M.

Number of pages: 22

Extract:

An introduction to the law and economics of
regulation
Alessio M. Pacces and Roger J. Van den Bergh



1. ECONOMICS OF REGULATION AND THE PURPOSE
OF THIS BOOK
The goal of this book is to offer the reader a non-technical, but scientifically
rigorous, overview of the major themes in the economics of regulation. This is
a very ambitious goal for at least two reasons. First, regulation is ubiquitous.
It is virtually impossible not to be confronted with regulation in a typical day
of our life. Second, regulation of different activities raises different issues.
Although the economic explanations and rationales for regulation can be
conceptualized in certain categories, they interact quite differently depending
on the specific activity in which individuals and firms engage. A few exam-
ples may help clarify both points.
We all use electricity, gas and water on a daily basis; most of us use trans-
portation and telecommunication services with the same frequency. The provi-
sion of these services is extensively regulated, and the fundamental reason is
that parts of the supply chain of these services present natural monopoly
features. Natural monopoly implies that supply of a certain service or part
thereof is economically viable only in the presence of a monopolist, which
raises a number of problems. The most obvious difficulty for consumers is
high prices and limited supply, both of which are countered by regulation.
However, other problems may just be subtler. They tend to be industry-
specific. Water, for instance, presents important safety issues. ...