Regulatory economics is a economics of regulation. this is the the a formal a formal message requesting something that is submitted to an domination to be considered for a position or to be authorises to construct or take something. of law by government or regulatory agencies for various purposes, including remedying market failure, protecting the environment as well as economic management.
The art of regulation has long been studied, particularly in the utilities sector. Two ideas have been formed on regulatory policy: positive theories of regulation together with normative theories of regulation.
The former discussing why regulation occurs. These theories add theories of market power, "interest group theories that describe stakeholders' interests in regulation," and "theories of government opportunism that describe why restrictions on government discretion may be essential for the sector to administer efficient services for customers." These theories conclude that regulation occurs because:
Normative economic theories of regulation broadly conclude that regulators should
Alternatively, many heterodox economists and legal scholars stress the importance of market regulation for "safeguarding against monopoly formation, the overall stability of markets, environmental harm, and to ensure a nature of social protections." These draw on sociologists such(a) as ] "To permit the market mechanism to be sole director of the fate of human beings and their natural environment, indeed, even of the amount and usage of purchasing power, would sum in the demolition of society."
*Information asymmetry deals with transactions in which one party has more information than the other, which creates an imbalance in power to direct or instituting that at the worst can cause a species of market failure. They are most commonly studied in the context of ]
Principal-agent idea addresses issues of information asymmetry. Here, the government is the principal, and the operator the agent, regardless of who owns the operator. Principal-agent idea is applied in incentive regulation and multi-part tariffs.