A Case for Quantity Regulation

14 Pages Posted: 23 Jan 2001

See all articles by Andrei Shleifer

Andrei Shleifer

Harvard University - Department of Economics; National Bureau of Economic Research (NBER); European Corporate Governance Institute (ECGI)

Edward L. Glaeser

Harvard University - Department of Economics; Brookings Institution; National Bureau of Economic Research (NBER)

Multiple version iconThere are 2 versions of this paper

Date Written: January 2001

Abstract

Contrary to the standard economic advice, many regulations of financial intermediaries, as well as other regulations such as blue laws, fishing rules, zoning restrictions, or pollution controls, take the form of quantity controls rather than taxes. We argue that costs of enforcement are crucial to understanding these choices. When violations of quantity regulations are cheaper to discover than failures to pay taxes, the former can emerge as the optimal instrument for the government, even when it is less attractive in the absence of enforcement costs. This analysis is especially relevant to situations where private enforcement of regulations is crucial.

Suggested Citation

Shleifer, Andrei and Glaeser, Edward L., A Case for Quantity Regulation (January 2001). Harvard Institute of Economic Research Paper No. 1909. Available at SSRN: https://ssrn.com/abstract=256743 or http://dx.doi.org/10.2139/ssrn.256743

Andrei Shleifer

Harvard University - Department of Economics ( email )

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HOME PAGE: http://www.economics.harvard.edu/~ashleife/

National Bureau of Economic Research (NBER)

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European Corporate Governance Institute (ECGI)

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Edward L. Glaeser (Contact Author)

Harvard University - Department of Economics ( email )

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Brookings Institution

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National Bureau of Economic Research (NBER)

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United States

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