Coase and the Transaction Cost Approach to Regulation

18 Pages Posted: 11 Jun 2015

See all articles by Marian W. Moszoro

Marian W. Moszoro

George Mason University - Department of Economics; George Mason University - Interdisciplinary Center for Economic Science (ICES); Warsaw School of Economics (SGH)

Pablo T. Spiller

University of California, Berkeley - Business & Public Policy Group

Date Written: June 8, 2015

Abstract

Early economic research on natural monopoly regulation focused on market failure -- pricing tariffs and externalities. While Coase's multi-tariff marginal cost pricing became the standard, his approach to externality regulation as a contractual issue shifted the debate to transaction costs, but failed to recognize the associated political hazards. The renewed approach to regulation is more cognizant of the interplay of transaction costs and political hazards. In this paper, we show that regulatory rigidities arise as a response to political hazards of opportunistic expropriation and challenges from interested third parties to public agents.

Keywords: Utilities, Regulation, Transaction Costs, Politics, Coase

JEL Classification: L14, L24, L33, L51

Suggested Citation

Moszoro, Marian W. and Spiller, Pablo T., Coase and the Transaction Cost Approach to Regulation (June 8, 2015). Available at SSRN: https://ssrn.com/abstract=2616404 or http://dx.doi.org/10.2139/ssrn.2616404

Marian W. Moszoro (Contact Author)

George Mason University - Department of Economics ( email )

4400 University Drive
Fairfax, VA 22030
United States

HOME PAGE: http://economics.gmu.edu/people/mmoszoro

George Mason University - Interdisciplinary Center for Economic Science (ICES) ( email )

400P Truland Building
George Mason University
Fairfax, VA 22030
United States

Warsaw School of Economics (SGH) ( email )

aleja Niepodleglosci 162
PL-Warsaw, 02-554
Poland

Pablo T. Spiller

University of California, Berkeley - Business & Public Policy Group ( email )

545 Student Services Building
Berkeley, CA 94720
United States
510-642-1502 (Phone)
510-642-2826 (Fax)

Register to save articles to
your library

Register

Paper statistics

Downloads
141
Abstract Views
1,005
rank
204,203
PlumX Metrics