extending the economic theory of regulation to the form of policy.Image.Marked资料.pdf

Public Choice 72: 167-191, 1991. © 1991 Kluwer Academic Publishers. Printed in the Netherlands. Extending the economic theory of regulation to the form of policy* ERIC RASMUSEN Centerfor the Study o f the Economy and the State, University of Chicago and John E. Anderson Graduate School o f Management, UCLA, Los Angeles, CA 90024 MARK ZUPAN School of Business, University o f Southern California, Los Angeles, CA 90089-1421 Submitted 26 June 1990; accepted 11 July 1990 Abstract. The mutually beneficial connection between industries and the governments that regu- late them is the subject of a large literature led by Stigler (1971). What has not been studied is how firms choose their desired policies from the set including entry barriers, price floors, subsidies, and demand stimulation. We take as given that government and incumbents form the supply and demand for regulation and explore the choice of political product. I. Introduction In his seminal article, George Stigler (1971: 4) argued that there is a market for regulation, in which government policymakers provide the supply and indus- trial producers comprise the demand: The state has one basic resource which in pure principle is not shared with even the mightiest of its citizens: the power to coerce. The state can seize money by the only method which is permitted by the laws of a civilized society, by taxation. The state can ordain the physical movements of re- sources and the economic decisions of households and firms without their consent. These powers provide the possibilities for the utilization of the state by an industry to increase its profitability. Stigler points ou