2 thoughts on “Statutory regulation vs private regulation”

  1. Posted 16/01/2018 at 15:46 | Permalink

    It’s not a question of competition per se but a question of transparency and power.
    Sometimes markets make things better. Sometimes government regulators are required to make the markets work.
    Financial regulation worked badly for consumers until the consumer protection bureau was there to help the less powerful assert their rights. Otherwise all you had was a market for sharks.

  2. Posted 16/01/2018 at 15:59 | Permalink

    What I think I’m trying to say is that there’s often a prisoners dilemma where even if it’s better for everyone if you act ‘decently’ unless everyone does does it’s sub optimal to do so.
    If you’re part of a well self regulated scheme but it just gets undercut by the dishonest then there’s no benefit to your regulations- think loan sharks, did blue glazing, sub prime mortgages (maybe), dangerous toys, snake oil, etc. The Govt (and its monopoly on violence otherwise known as the police, the courts, etc) can step in and act to allow market coordination for optimal outcomes.
    Perhaps the actual rules don’t matter so much sometimes as the ability to enforce them.

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