Publication of the week:

PROFESSOR MARTIN RICKETTS

Monday 28 May 2007

Martin Ricketts. "Economic regulation: principles, history and methods", in M. Crew & D. Parker (eds), International Handbook on Economic Regulation (Cheltenham: Edward Elgar, 2006), 34-62.

This paper reviews differing approaches to the economics of regulation. It contrasts the 'public interest' theory with the 'public choice' approach and it discusses the analysis of regulation that emerges from the New Institutional Economics. At the heart of the paper is the contrast between regulation conceived as the application of a set of rules to govern essentially decentralised decision making processes, and regulation as a form of direct intervention to achieve particular outcomes desired by centralised decision makers. The regulation of natural monopoly and the public utilities provides examples of both types of regulatory intervention. A regulatory framework conducive to market processes is now widely accepted as an important institutional precondition for economic development. However, the decline of public ownership has led to a greater use of private sector suppliers in the provision of public services and this has paradoxically encouraged the growth of detailed intervention by means of regulatory 'contracts'.

Martin Ricketts is Professor of Economic Organisation. A graduate of Newcastle and York Universities, his early work was in Public Finance and Public Choice, but his research since the mid 1980s has been mainly in the developing field of the New Institutional Economics and the analysis of the organisational structure of Business Enterprise.