Working Paper: NBER ID: w16735
Authors: Pablo T. Spiller
Abstract: This paper discusses the fundamental underpinnings and some implications of transaction cost regulation (TCR), a framework to analyze the interaction between governments and investors fundamentally, but not exclusively, in utility industries. TCR sees regulation as the governance structure of these interactions, and thus, as in standard transaction cost economics, it places emphasis in understanding the nature of the hazards inherent to these interactions. The emphasis on transactional hazards requires a microanalytical perspective, where performance assessment is undertaken within the realm of possible institutional alternative. In that sense, politics becomes fundamental to understanding regulation as the governance of public / private interactions. The paper discusses two fundamental hazards and their organizational implications: governmental and third party opportunism. Both interact to make regulatory processes and outcomes more rigid, formalistic, and prone to conflict than envisioned by relational contracting.
Keywords: No keywords provided
JEL Codes: D02; D73; L14; L51
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| governmental opportunism (H10) | decrease in investment in the utility sector (L94) |
| third-party opportunism (D72) | increased regulatory complexity and conflict (L59) |
| governmental opportunism and third-party opportunism (D72) | rigid regulatory environment (K23) |