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A Case for Quantity Regulation

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  • Edward L. Glaeser
  • Andrei Shleifer

Abstract

Contrary to the standard economic advice, many regulations of financial intermediaries, as well as other regulations such as blue laws, fishing rules, zoning restrictions, or pollution controls, take the form of quantity controls rather than taxes. We argue that costs of enforcement are crucial to understanding these choices. When violations of quantity regulations are cheaper to discover than failures to pay taxes, the former can emerge as the optimal instrument for the government, even when it is less attractive in the absence of enforcement costs. This analysis is especially relevant to situations where private enforcement of regulations is crucial.

Suggested Citation

  • Edward L. Glaeser & Andrei Shleifer, 2001. "A Case for Quantity Regulation," NBER Working Papers 8184, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberwo:8184
    Note: CF LE PE
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    References listed on IDEAS

    as
    1. Louis Kaplow & Steven Shavell, 2002. "On the Superiority of Corrective Taxes to Quantity Regulation," American Law and Economics Review, American Law and Economics Association, vol. 4(1), pages 1-17, January.
    2. Hay, Jonathan R & Shleifer, Andrei, 1998. "Private Enforcement of Public Laws: A Theory of Legal Reform," American Economic Review, American Economic Association, vol. 88(2), pages 398-403, May.
    3. Edward Glaeser & Simon Johnson & Andrei Shleifer, 2001. "Coase Versus the Coasians," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 116(3), pages 853-899.
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    Blog mentions

    As found by EconAcademics.org, the blog aggregator for Economics research:
    1. Externalities, rules and prices
      by Jim in Our Word is Our Weapon on 2008-03-05 16:48:23

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    Cited by:

    1. Michael Mandler, 2001. "Accessible Pareto-Improvements: Using Market Information to Reform Inefficiencies," William Davidson Institute Working Papers Series 398, William Davidson Institute at the University of Michigan.
    2. Raghuram G. Rajan & Ioannis Tokatlidis, 2005. "Dollar Shortages and Crises," International Journal of Central Banking, International Journal of Central Banking, vol. 1(2), September.
    3. Jonathan Gruber & Daniel M. Hungerman, 2006. "The Church vs the Mall: What Happens When Religion Faces Increased Secular Competition?," NBER Working Papers 12410, National Bureau of Economic Research, Inc.

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    More about this item

    JEL classification:

    • L51 - Industrial Organization - - Regulation and Industrial Policy - - - Economics of Regulation
    • H21 - Public Economics - - Taxation, Subsidies, and Revenue - - - Efficiency; Optimal Taxation

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