Is Economic Regulation Possible? Arrow's Impossibility Theorem and the Management of Joint Use Infrastructure

16 Pages Posted: 11 Sep 2007

Abstract

Economic regulation is portrayed as the objective application of clear economic theory to data in order to develop outcomes which overcome the problems associated with natural monopoly in a non-political, unbiased fashion. However, is the appearance of objectivity only skin-deep? This paper argues that it is; that economic regulation is a form of social choice and that the need for subjective assumptions underpinning regulatory forecasts renders this social choice subject to Arrow's (1950) Impossibility Theorem. The same is true of any public-sector resource allocation process. The paper examines the consequences of this result for economic regulation using railways as a case study, and charts some potential policy options in response.

Keywords: Railways, Social Choice, Regulation

JEL Classification: D71, L51, L92

Suggested Citation

Wills-Johnson, Nick, Is Economic Regulation Possible? Arrow's Impossibility Theorem and the Management of Joint Use Infrastructure. Available at SSRN: https://ssrn.com/abstract=1011931 or http://dx.doi.org/10.2139/ssrn.1011931

Nick Wills-Johnson (Contact Author)

DBP ( email )

PO Box Z5267
St Georges Terrace
Perth, 6831
Australia

Register to save articles to
your library

Register

Paper statistics

Downloads
133
Abstract Views
807
rank
217,129
PlumX Metrics