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Spring 2004

ISSN 0890-913X

Volume 19, Number 2

Categories: Spring 2004 | Political Science

Opportunities Forgone : The Unmeasurable Costs of Regulation

Bruce L. Benson , Florida State University

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JournalofPrivateEnterpriseOpportunitiesForgone:TheUnmeasurableCostsofRegulation*BruceL.BensonFloridaStateUniversityEconomicregulationisoftenjustified,atleastallegedly,becauseofmarketfailure,butrecognitionthatgovernmentalsocanfailsuggeststhatregulationofmarketactivitycangeneratenetlossesinsocialwelfareratherthannetbenefits.Special-interestorrentseekingtheoriesofregulation[e.g.,Stigler(1971),Tullock(1967)]offerinsightsregardingthepotentialmagnitudeofsuchwelfarelosses.Thesemodelstendtorelyonstaticequilibriumanalysis,however,andtheyoftenfailtoconsidertheknowledgeproblemfacingentrepreneursinthepolitical,bureaucraticandmarketprocessesthatareboundtogetherthroughregulation.Thesecharacteristicsofsuchmodelsmeanthatthecostsofregulationtendtobeunderestimated.Thefollowinganalysischaracterizeseconomicregulationas:(1)aneffortbyspecialintereststoinfluencetheallocationofpropertyrights,in(2)acontinuouspath-dependentspontaneousevolution(asapposedtoastaticequilibrium),drivenby(3)entrepreneurshipinongoingmarket,politicalandbureaucraticdiscoveryprocesses.Theopportunitycostsofsucharegulatoryenvironmentareemphasized.Inparticular,deliberateeffortstoimposerulescreateincentivestofindandexploituncontrolledmarginsinordertoavoidthefullconsequencesof*ThispaperispartofalargerprojectontheAEvolutionofLaw@whichhasbeensupportedbytwoEarhartFellowshipsandbygrantsfromtheCarthageFoundationandtheInstituteforHumaneStudies.ThispaperdrawsuponBenson(2002,2003),butfocusesonadifferentissuethanisemphasizedinthosepapers.1

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Title	Opportunities Forgone : The Unmeasurable Costs of Regulation
Authors/Creators:	Bruce L. Benson , Florida State University
Year:	2004
Volume:	19
Number:	2
Pages:	1 - 25
Publisher:	The Association of Private Enterprise Education
ISSN:	0890-913X
Document Type:	Articles
Keywords:	Legislation, Economic freedom, Market, Political competition, Cost analysis, Private ownership, Entrepreneurship, Bureaucracy, Government policy, Equilibrium, Macroeconomics, Monopoly, Assets, Prices, Voter behaviour, Institutional evolution, Entrepreneurs, Political entrepreneurship, Costs

Citation:
Benson, Bruce L. / 2004. "Opportunities Forgone : The Unmeasurable Costs of Regulation." The Journal of Private Enterprise, 19(2): 1-25.