Regulatory Decision-Making and Economic Analysis

26 Pages Posted: 7 Sep 2018 Last revised: 9 Oct 2018

See all articles by Mariano-Florentino Cuéllar

Mariano-Florentino Cuéllar

Stanford Law School; Freeman Spogli Institute for International Studies

Jerry Louis Mashaw

Yale Law School

Date Written: September 1, 2016

Abstract

The economic analysis of regulation raises fundamental questions about how society assigns value to different outcomes and states of the world, how conflict over law and public policy is resolved, and how institutional realities affect –– in ways both planned and unplanned –– forms of societal decision-making that are meant to incorporate ideals of technical rigor, administrability, and responsiveness. In countries like the United States, the conduct of such analysis has implications for environmental protection, communications and technology policy, public health, immigration, national security, and other areas affecting risk and welfare in society. This paper covers only a portion of the territory necessary to understand those implications, focusing on the following essential topics: First, what do we mean by “economic analysis” and what do we mean by “regulation”? Second, why has this topic become an important one, not only the United States, but in most advanced democracies? Third, why is economic analysis and regulation a contested, even contentious, aspect of modern regulatory activity? Finally, and most important, how is economic analysis structured into regulatory decision-making, and how might existing arrangements evolve over time? As we address these questions, we explain why a familiarity with both the promise and the limits of economic analysis is crucial to any serious understanding of regulation –– whether prescriptive or descriptive –– in advanced economies. In practice, the aspirations of economic analysis in the regulatory state must be reconciled with various administrative and legal arrangements necessary to advance values, such as adjudicatory fairness or political responsiveness, that are often in tension with the technical rigor to which economic analysis of regulation aspires.

Keywords: economic analysis, regulation, law, organizations, institutions, political economy, environmental protection, communications and technology policy, public health, immigration, national security

Suggested Citation

Cuéllar, Mariano-Florentino and Mashaw, Jerry Louis, Regulatory Decision-Making and Economic Analysis (September 1, 2016). Stanford Law and Economics Olin Working Paper No. 525; Stanford Public Law Working Paper. Available at SSRN: https://ssrn.com/abstract=3238749 or http://dx.doi.org/10.2139/ssrn.3238749

Mariano-Florentino Cuéllar (Contact Author)

Stanford Law School ( email )

559 Nathan Abbott Way
Stanford, CA 94305-8610
United States
650-723-9216 (Phone)
650-725-0253 (Fax)

Freeman Spogli Institute for International Studies ( email )

United States

Jerry Louis Mashaw

Yale Law School ( email )

P.O. Box 208215
New Haven, CT 06520-8215
United States
203-432-1671 (Phone)

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