68 Pages Posted: 24 Oct 2022 Last revised: 13 Jun 2024

See all articles by Jeremy Kidd

Jeremy Kidd

Drake University - Law School

Date Written: October 21, 2022


Marketsa re imperfect, andt he suboptimal resultsa re frequently used to justifyg overnment regulation. Government regulation, however, is also imperfect,a nd thes uboptimal results are, less-frequently,u sedt oj ustify deregulatoryefforts.Located betweenthosepoles is industryself-regulation, in whicht he industry is tasked with effectuatingr egulatoryg oals. Unfortunately,b ut perhapsn ot surprisingly, industrys elf-regulationi sa lso imperfect.I ndustrym embers,w henc alledo nt oe ngage in self-regulation, will face what Austrian economists call 'the knowledgep roblem,' but at lesserseverity than full government regulation. Industrymembers will also face avariety of public choice pressures, andthosepressuresmay be more disruptivet hanu nderf ullg overnment regulation. Therea re,t herefore,n o perfect solutions to market imperfections,a nd policym akerss eeking solutions must weight he relativet radeoffs on ac ase-specificb asis,i ft hey wish to obtainoptimal outcomes.

Keywords: Self-regulation, rent-seeking, knowledge problem, public choice, regulatory capture

JEL Classification: B53, D02, D43, D72, D73, D82, K23,

Suggested Citation

Kidd, Jeremy, NO PERFECTSOLUTIONS FORMARKET IMPERFECTIONS (October 21, 2022). Law & Economics Center at George Mason University Scalia Law School Research Paper Series No. 22-027, Available at SSRN: or

Jeremy Kidd (Contact Author)

Drake University - Law School ( email )

27th & Carpenter Sts.
Des Moines, IA 50311
United States

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