Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/89727
Authors: 
Nitzan, Shmuel
Procaccia, Uriel
Tzur, Joseph
Year of Publication: 
2013
Series/Report no.: 
CESifo Working Paper 4547
Abstract: 
A substantial number of regulatory frameworks are commonly viewed by impartial observers as inordinately complex. Is there an explanation for this phenomenon? Employing a partial equilibrium model, this paper approaches the problem of complexity from a political-economy vantage point. It underscores some hitherto unexplored ways in which complexity serves the narrow interests of some market agents and sets up effective barriers to entry to their competitors. These rent-inducing barriers often take the form of rapid and extensive supplements and changes in the regulatory environment, which make it hard for smaller market agents to adjust and maintain their competitive edge. Whereas regulatory schemes are normally conceived as enhancing transparency, and changes in these schemes are usually associated with salutary reformative agendas, this Article underscores the dark side of both phenomena by focusing on the anti-competitive features of regulation and reform and by clarifying the role of complexity in enhancing and preserving the narrow interests of certain market participants.
Subjects: 
regulation
barriers to entry
accounting
securities regulation
the market of charters
race to the top
race to the bottom
JEL: 
D70
K00
Document Type: 
Working Paper

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