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Licit and Illicit Responses to Regulation

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Handbook of New Institutional Economics

Newregulation can elicit a great variety of responses from individuals, firms, interest groups, and bureaucracies. This chapter examines a range of common legal and illegal behaviors that arise as responses to new regulations. It also compares the approaches that newinstitutional economics and neoclassical economics use to study these responses. The motivation for introducing new regulation is generally to influence behavior: to promote or restrict competition, to redistribute income, to increase or reduce barriers to entry, to increase or reduce spillovers, and so on. However, regulation often influences behavior in ways that differ from the initially stated rationale. This chapter focuses on the consequences of regulation, on this wide range of responses, rather than on the rationale offered for introducing the regulation.

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Author information

Authors and Affiliations

  1. Department of Economics, Washington University in St. Louis, USA

    Lee Benham

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  1. Lee Benham
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Editor information

Editors and Affiliations

  1. Université de Paris, 106 Bd de l’Hôpital, 75647, Paris, France

    Claude Ménard

  2. The Ronald Coase Institute, 5610 Wisconsin Ave, 20815, Chevy Chase, MD, USA

    Mary M. Shirley

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Benham, L. (2008). Licit and Illicit Responses to Regulation. In: Ménard, C., Shirley, M.M. (eds) Handbook of New Institutional Economics. Springer, Berlin, Heidelberg. https://doi.org/10.1007/978-3-540-69305-5_24

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