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Reforming Rules and Regulations

Reforming Rules and Regulations: Laws, Institutions, and Implementation

edited by Vivek Ghosal
Copyright Date: 2011
Published by: MIT Press
Pages: 328
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  • Book Info
    Reforming Rules and Regulations
    Book Description:

    In recent years governments have paid increasing attention to weighing the socioeconomic benefits of regulations against their costs. Rules and regulations governing economic activity are typically formulated with a view to their benefits. Their effects on the costs and inefficiencies, in particular the possible chilling effects on competition and innovation, have received limited attention. In this collection, experts from Europe, the United States, and Asia examine a range of issues related to the effect of rules and regulations on competition, and explore the role of key institutions that affect market outcomes. Their contributions argue for using quantitative methods to guide policy and reform rules and regulation, and many of the essays offer methodologies for assessment and recommendations for policy alternatives.Topics covered include the effectiveness of R&D tax incentives in OECD countries; the adverse effect of EU climate policy on competitiveness; telecommunication regulation in the developing countries of India, China, and Sri Lanka; the role of banks in fostering small and medium enterprises in Argentina and Chile; the evolution of the U.S. Federal Home Loan Bank (FHLB) System; and developing quantitative screening tools to assess which sectors in the economy might benefit most from regulatory reforms.Contributors Victoria Alexeeva-Talebi, Niels Anger, Dallas Burtraw, Martin Cave, Matthew Corkery, Adriaan Dierx, Sean Ennis, W. Scott Frame, Vivek Ghosal, Ivan Hascic, Ivan Hascic, Fabienne Ilzkovitz, Nick Johnstone, Boris Lokshin, Andreas Löschel, María Soledad Martínez Pería, Pradeep S. Mehta, Udai S. Mehta, Malwina Mejer, Siddhartha Mitra, Pierre Mohnen, Karen Palmer, Anthony Paul, Bruno van Pottelsberghe de la Potterie, Sergio L. Schmukler, Augusto de la Torre, Lawrence J. White

    eISBN: 978-0-262-28941-2
    Subjects: Business, Economics

Table of Contents

  1. Front Matter
    (pp. i-iv)
  2. Table of Contents
    (pp. v-vi)
  3. Series Foreword
    (pp. vii-viii)

    This book is part of the CESifo Seminar Series. The series aims to cover topical policy issues in economics from a largely European perspective. The books in this series are the products of the papers and intensive debates that took place during the seminars hosted by CESifo, an international research network of renowned economists organized jointly by the Center for Economic Studies at Ludwig-Maximilians University, Munich, and the Ifo Institute for Economic Research. All publications in this series have been carefully selected and refereed by members of the CESifo research network....

  4. Preface
    (pp. ix-x)
    Vivek Ghosal
  5. 1 Global Initiatives in Reforming Rules and Regulations
    (pp. 1-32)
    Sean Ennis and Vivek Ghosal

    Rules and regulations serve as a governance structure for many areas of economic activity. They are developed for a variety of purposes, including economic benefit, social improvement, health improvement, reduced environmental risk, protection of intellectual property, and fairness and political expediency. The rules are formulated and enforced by a variety of institutions such as local or national governments, and endorsed by state and private bodies, including professional organizations such as medical and legal, among others.

    Generally, rules and regulations are developed with a focus on their alleged benefits. This practice ignores the fact that in some cases, rules and regulations...

  6. 2 What Does It Take for an R&D Tax Incentive Policy to Be Effective?
    (pp. 33-58)
    Pierre Mohnen and Boris Lokshin

    Because governments believe in R&D’s high social rate of return, that R&D contributes to economic growth and ensures competitiveness, a nonnegligible amount of public funds is spent to induce firms to invest in R&D. A popular means is the policy of R&D tax incentives, whereby corporate income taxes or employer’s social security contributions are reduced in proportion to their R&D effort. Then, with the cost of doing R&D reduced, firms should be able to move closer to an R&D level that would be socially optimal. This policy has generally the virtue of being neutral in that tax relief is given...

  7. 3 On the Consequences of a Highly Fragmented European Patent System
    (pp. 59-78)
    Bruno van Pottelsberghe de la Potterie and Malwina Mejer

    The rationale justifying patent systems essentially lies in utilitarian theory. Theoretically, by the “public-good” properties of knowledge (knowledge that diffuses across geographical and institutional boundaries), the rate of innovation is suboptimal. In order to be able to recover the costs of past research activities, an inventor would naturally want to keep the outcome secret. It seems therefore optimal for society to provide a temporary monopoly to the inventor in exchange of the disclosure of its invention. Patent systems provide their owners exclusive rights to commercially exploit an invention. In this respect they are an incentive to innovate (and hence benefit...

  8. 4 Environmental Policy Design and the Fragmentation of International Markets for Innovation
    (pp. 79-104)
    Nick Johnstone and Ivan Haščič

    It has long been argued that the implementation of market-based environmental policy instruments such as taxes and tradable permits is more likely to lead to greater technological innovation than direct forms of regulation such as technology-based standards, because they give firms the “flexibility” to identify the optimal means of innovating to meet the given environmental objective.¹ While the theoretical case for the use of market-based instruments is well developed,² empirical evidence remains limited.³

    This chapter aims to contribute to the body of evidence that relates to this proposition. In particular, it is argued that the more flexible is an individual...

  9. 5 Alleviating Adverse Implications of EU Climate Policy on Competitiveness: The Case for Border Tax Adjustments or the Clean Development Mechanism?
    (pp. 105-128)
    Victoria Alexeeva-Talebi, Niels Anger and Andreas Löschel

    The European Union has recently started to reform its future energy and climate policies and its regulations of the European Emissions Trading Scheme (EU ETS). In March 2007, the European Council agreed to ambitious climate and energy policy targets subsequent to the expiry of the Kyoto Protocol in the year 2012. It envisaged reducing EU greenhouse gas emissions by 2020 to at least 20 percent of the 1990 levels, and to 30 percent if other industrialized countries undertake similar effort. In January 2008, the European Commission presented a comprehensive legislative package that would implement the ambitious goals formulated by the...

  10. 6 Compensation for US Electricity Consumers under a CO₂ Emissions Cap
    (pp. 129-160)
    Anthony Paul, Dallas Burtraw and Karen Palmer

    The creation of a cap-and-trade program for CO₂ emissions in the United States would involve the largest assignment and enforcement of new property rights in North America in over a century. The property rights would be embodied in emissions allowances, and a crucial decision in the design of such a program is the initial distribution, or allocation, of the allowances. This decision will have efficiency and distributional consequences, and the sheer magnitude of allowance value, likely hundreds of billions of dollars per annum, make the issue of allowance allocation a high-stakes political challenge. The universe of options includes free allocation...

  11. 7 How Vital Is Regulatory Independence? The Telecom Sector in Developing Countries
    (pp. 161-194)
    Pradeep S Mehta, Siddhartha Mitra and Udai S Mehta

    Regulation is needed to deal with problems not handled adequately by the market mechanism and facilitate the free fair and efficient functioning of the market. The emphasis on fairness suggests that it might not be advisable for the regulator to engage in redistributive measures that should be considered as belonging to the domain of policy makers. In reality, however, there is enough evidence of regulators engaging in redistributive action.

    Successful action by the regulator to deal with market failures, anticompetitive practices, or unfair competition requires that the regulator must be unattached to any particular lobby group with motives that militate...

  12. 8 Regulation and Barriers to Trade in Telecommunications Services in the European Union
    (pp. 195-214)
    Martin Cave and Matthew Corkery

    Imagine Idaho as a state in a 27-member “second-life” union of states of varying sizes. It has its own recently liberalized telecommunications sector, consisting primarily of a historic monopolist whose network is confined to the state; all interstate calls being accomplished via interconnection with another operator.

    Telecommunications purchasers in “Idaho” consist of four categories: households; intra-state businesses; businesses, such as Wal-Mart, that operate in other states as well; and firms whose activities girdle the earth (i.e., embrace multiple federal states), such as Microsoft, BP, and Mittal Steel. The requirements of the four categories are different: the first two need little...

  13. 9 Drivers and Obstacles to Banking SMEs: The Role of Competition and the Institutional Framework
    (pp. 215-254)
    Augusto de la Torre, María Soledad Martínez Pería and Sergio L. Schmukler

    How small and medium enterprises (SMEs) finance their operations is a subject of significant interest to policy makers and researchers alike. SMEs account for a sizable share of overall employment levels in both developed and developing countries.¹ Furthermore, since most large companies usually start as small enterprises, the viability of SMEs becomes crucial to any economy wishing to prosper. Concerns are compounded by evidence showing that SMEs tend to be more financially constrained than large firms and that lack of access to finance is an important obstacle to their growth. In particular, SMEs find it difficult to obtain external financing...

  14. 10 The Federal Home Loan Bank System: Current Issues in Perspective
    (pp. 255-276)
    W. Scott Frame and Lawrence J. White

    During this past decade substantial analytical and political attention was paid to two large government sponsored-enterprises (GSEs)—Fannie Mae and Freddie Mac—that are at the center of the US secondary residential mortgage market. Frequently overlooked was another large GSE—the Federal Home Loan Bank (FHLB) System. The FHLB System is also involved in residential mortgage finance, albeit in a different way.¹ Indeed, by one standard measure of size—the balance sheet assets of the organizations—the FHLB System is now the largest of the three housing GSEs.²

    The FHLB System is composed of twelve cooperatively owned wholesale Federal Home...

  15. 11 Product Market and Sector Monitoring: A New Tool Contributing to the Governance of the European Single Market
    (pp. 277-304)
    Adriaan Dierx and Fabienne Ilzkovitz

    Economic integration within the European Union has come a long way. One of the key objectives of European economic integration has been the free movement of people, goods, services and capital within the single market. A cornerstone of this process was the adoption and implementation of the Single Market Programme (SMP), which aimed to eliminate nontariff trade barriers by January 1, 1993. While the measures initially planned in the SMP mainly concerned manufacturing industries, over time its scope has been gradually widened, culminating in the adoption of the Services Directive in 2006. Services now account for around 70 percent of...

  16. List of Contributors
    (pp. 305-306)
  17. Index
    (pp. 307-316)