General and Specific Legal Rules
29 Pages Posted: 20 Jul 2004
Date Written: July 16, 2004
Legal rules may be general (that is, applicable to a broad range of situations) or specific. Adopting a custom-tailored rule for a specific activity permits the regulator to make efficient use of information about the social costs and benefits of that activity. However, the rule maker typically relies on the regulated parties for such information. The regulated parties may attempt to influence the rule maker, producing rules that reflect their private interests. We show that in some cases limiting the rule maker to a single rule for multiple activities will moderate this influence and maximize welfare.
Keywords: legal rules, general versus specific rules, lobbying, rules versus standards, simple versus complex rules
JEL Classification: D72, H11, K00, K23, K20, K14, K4, L5
Suggested Citation: Suggested Citation