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Why does the confidence in companies, but not the confidence in the government, affect the demand for regulation differently across countries?

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  • Pál Czeglédi

    (University of Debrecen)

Abstract

In an attempt to contribute to the literature on how and why confidence in market participants and in the government shape the demand for market regulation, this paper contrasts two interpretations. The interpretation implicit in the empirical literature supposes that people trade off market failures for government failures. The paper argues that implicit in the broader public choice literature there is an alternative that emphasizes the nirvana fallacy and leads to the conclusion that people’s views on markets and government in general is a determinant of the effect of trust on the demand for regulation. The paper applies a meta-regression analysis to examine the results of country-level regressions with different survey waves of the Integrated Values Surveys. It shows that the effect of the two kinds of trust are asymmetric and that the negative effect of the confidence in companies on the demand for government regulation is larger in countries that score higher on individualism.

Suggested Citation

  • Pál Czeglédi, 2022. "Why does the confidence in companies, but not the confidence in the government, affect the demand for regulation differently across countries?," Public Choice, Springer, vol. 193(3), pages 211-231, December.
    • Handle: RePEc:kap:pubcho:v:193:y:2022:i:3:d:10.1007_s11127-022-01013-0
    DOI: 10.1007/s11127-022-01013-0
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    More about this item

    Keywords

    Institutional trust; Government intervention; Meta-regression; Regulation;
    All these keywords.

    JEL classification:

    • D78 - Microeconomics - - Analysis of Collective Decision-Making - - - Positive Analysis of Policy Formulation and Implementation
    • H10 - Public Economics - - Structure and Scope of Government - - - General
    • L50 - Industrial Organization - - Regulation and Industrial Policy - - - General

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