Optimal Regulation addresses the central issue of regulatory economics - how toregulate firms in a way that induces them to produce and price "optimally." It synthesizes the majorfindings of an extensive theoretical literature on what constitutes optimality in various situationsand which regulatory mechanisms can be used to achieve it. It is the first text to provide aunified, modern, and nontechnical treatment of the field.The book includes models for regulatingoptimal output, tariffs, and surplus subsidy schemes, and presents all of the material graphically,with clear explanations of often highly technical topics.Kenneth E. Train is Associate AdjunctProfessor in the Department of Economics and Graduate School of Public Policy at the University ofCalifornia, Berkeley. He is also Principal of the firm Cambridge Systematics.Topics include: Thecost structure of natural monopoly (economies of scale and scope). Characterization of firstandsecond-best optimality. Surplus subsidy schemes for attaining first-best optimality. Ramsey pricesand the Vogelsang-Finsinger mechanism for attaining them. Time-ofuse (TOU) prices and Riordan'smechanisms for attaining the optimal TOU prices' Multipart and self-selecting tariffs, and Sibley'smethod for using self-selecting tariffs to achieve optimality. The Averch-Johnson model of howrate-of-return regulation induces inefficiencies. Analysis of regulation based on the firm's returnon Output, costs, or sales. Price-cap regulation. Regulatory treatment of uncertainty and its impacton the firm's behavior. Methods of attaining optimality without direct regulation (contestability,auctioning the monopoly franchise.)

Are the limitations imposed on World Trade Organization (WTO) members' right to regulate efficient? This is a question that is only scarcely, if ever, analysed in existing literature. Boris Rigod aims to provide an answer to this fundamental concern. Using the tools of economic analysis and in particular the concept of economic efficiency as a benchmark, the author states that domestic regulatory measures should only be subject to scrutiny by WTO bodies when they cause negative international externalities through terms of trade manipulations. He then suggests that WTO law, applied by the WTO judiciary can prevent WTO members from attaining optimal levels of regulation. By applying a law and economics methodology, Rigod provides an innovative solution to the problem of how to reconcile members' regulatory autonomy and WTO rules as well as offering a novel analytical framework for assessing domestic regulations in the light of WTO law.

The Prudential Regulation of Banks applies modern economic theory to prudential regulation of financial intermediaries. Dewatripont and Tirole tackle the key problem of providing the right incentives to management in banks by looking at how external intervention by claimholders (holders of equity or debt) affects managerial incentives and how that intervention might ideally be implemented. Their primary focus is the regulation of commercial banks and S&Ls, but many of the implications of their theory are also valid for other intermediaries such as insurance companies, pension funds, and securities funds. Observing that the main concern of the regulation of intermediaries is solvency (the relation between equity, debt, and asset riskiness), the authors provide institutional background and develop a case for regulation as performing the monitoring functions (screening, auditing, convenant writing, and intervention) that dispersed depositors are unable or unwilling to perform. They also illustrate the dangers of regulatory failure in a summary of the S&L crisis of the 1980s. Following a survey of banking theory, Dewatripont and Tirole develop their model of the capital structure of banks and show how optimal regulation can be achieved using capital adequacy requirements and external intervention when banks are violated. They explain how regulation can be designed to minimize risks of accounting manipulations and to insulate bank managers from macroeconomic shocks, which are beyond their control. Finally, they provide a detailed evaluation of the existing regulation and of potential alternatives, such as rating agencies, private deposit insurance, and large private depositors. They show that these reforms are, at best, a complement, rather than a substitute, to the existing regulation which combines capital ratios with external intervention in case of insolvency. The Prudential Regulation of Banks is part of the Walras Pareto Lectures, from the Universiy of Lausanne.

The concept of homeostasis, the maintenance of the internal physiological environment of an organism within tolerable limits, is well established in medicine and physiology. In contrast, allostasis is a relatively new idea of 'viability through change'. With allostatic regulation by cephalic involvement, the body adapts to potentially diverse and dangerous situations through the activation of neural, hormonal, or immunological mechanisms. Allostasis explains how regulatory events maintain organismic viability, or not, in diverse contexts with varying set points of bodily needs and competing motivations. This 2005 book introduces the concept of allostasis and sets it alongside traditional views of homeostasis. It addresses basic regulatory systems and examines the behavior of bodily regulation under duress. The basic concepts of physiological homeostasis are integrated with disorders like depression, stress, anxiety and addiction. It will therefore appeal to graduate students, medical students and researchers working in physiology, epidemiology, endocrinology, neuroendocrinology, neuroscience, and psychology.

The book brings together academics, regulators, and industry experts to provide a multifaceted array of research and perspectives on insurance, its role and functioning, and the potential systemic risk it could create.

Examining the subject from a holistic and multidisciplinary perspective, Principles of Financial Regulation considers the underlying policies and the objectives of financial regulation.

The Paradox of Regulation is a tour de force of regulatory scholarship that successfully contextualizes the regulatory project as an effort to reduce multiple forms of risk. Three case studies of regulatory reforms, fascinating in their own right, when read together forcefully demonstrate why context matters to the actuarial assessments, political realities, and possibilities for insuring safety, security and integrity. Haines, penetrating analysis presents no simple answers to what works and why. The Paradox of Regulation nimbly demonstrates that the strengths and limits of a particular regulatory reform must be understood as a complicated response to a dynamic constellation of actuarial, political, and socio-cultural risks.,- Nancy Reichman, University of Denver, US , This new book by Fiona Haines is an elegant but sophisticated analysis of the three risks (technical, social and political) that regulation must address if it is to be effective. This analysis is original and fresh bringing together critiques of risk based regulation with empirical literature on compliance and effectiveness evaluation. This is exactly the sort of book we need more of to develop and deepen empirical and theoretical research in regulatory scholarship: - it helpfully melds together different literatures and theoretical approaches with her own empirical work on regulatory reforms to build a multi-layered theoretical analysis that really pushes forward our understanding of regulation, why it happens and how it fails and succeeds., - Christine Parker, Monash University, Australia ,This is an insightful and nuanced analysis of the strengths and limitations of regulation. Through a close grained analysis of three recent disasters, Haines demonstrates that regulation is not just a technical but also a political and a social project and how a failure to recognise its multiple dimensions can lead to regulatory failure. This book is a major contribution that enriches our understanding of the challenges of risk management and of how best to address them.'- Neil Gunningham, Australian National University, Canberra , Fiona Haines shows us that regulatory policy is complex and paradoxical in ways that should require us to attend to the substance and the politics of specific regulatory regimes. This book is a major contribution to the reconceptualisation of risk and regulation. It is a perceptive treatment of the role of crisis by one of the best scholars of regulation we have., - John Braithwaite, Australian National University, Canberra

This book provides a robust set of health economic principles and methods to inform societal decisions in relation to research, reimbursement and regulation (pricing and monitoring of performance in practice). We provide a theoretical and practical framework that navigates to avoid common biases and suboptimal outcomes observed in recent and current practice of health economic analysis, as opposed to claiming to be comprehensive in covering all methods. Our aim is to facilitate efficient health system decision making processes in research, reimbursement and regulation, which promote constrained optimisation of community outcomes from a societal perspective given resource constraints, available technology and processes of technology assessment. Importantly, this includes identifying an efficient process to maximize the potential that arises from research and pricing in relation to existing technology under uncertainty, given current evidence and associated opportunity costs of investment. Principles and methods are identified and illustrated across health promotion, prevention and palliative care settings as well as treatment settings. Health policy implications are also highlighted.

In this paper, we relate the scope and depth of regulatory reforms to growth outcomes in OECD countries. By means of a new set of quantitative indicators of regulation, we show that the cross-country variation of regulatory settings has increased in recent years, despite extensive liberalisation and privatisation in the OECD area. We then look at the regulation-growth linkage using data that cover a large set of manufacturing and service industries over the past two decades. We focus on multifactor productivity (MFP), which plays a crucial role in GDP growth and accounts for a significant share of its cross-country variance. We find evidence that reforms promoting private governance and competition (where these are viable) tend to boost productivity. Both privatisation and entry liberalisation are estimated to have a positive impact on productivity. In manufacturing the gains are greater the further a given country is from the technology leader, suggesting that regulation limiting ...