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Assessing Stigler’s Economic Theory of Regulation

Mount Equity Group Tokyo, Japan > News > Markets > Assessing Stigler’s Economic Theory of Regulation

Despite its flaws and limitations, Stigler’s seminal article on the theory of economic regulation offers important lessons.

George Stigler’s article “The Theory of Economic Regulation”—which celebrates its 50th anniversary this year—is one of the most influential political economy accounts of regulation. More than perhaps any other article, it shifted the prevailing explanation for regulation from a public interest model to a rational choice model. That is, it shifted regulatory scholars’ thinking from a model that once viewed regulation as emerging almost naturally from the mere existence of market failures to a model that instead sees regulation as a response to influence by businesses seeking to erect barriers against potential competitors.

Although decades old, “The Theory of Economic Regulation” still repays reading. Today’s readers, though, might well wonder at first why the article has received so much…

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