Encyclopedia of Law and Economics

Living Edition
| Editors: Alain Marciano, Giovanni Battista Ramello

The Standard Cost Model

Living reference work entry
DOI: https://doi.org/10.1007/978-1-4614-7883-6_753-1

Definition

The Standard Cost Model is a tool for the reduction of administrative burdens of businesses. It rests on a fairly simple technique of identifying such activities which are found unnecessary by experts and thus have the potential of savings on expenses. The economic idea behind its application is that means are unleashed which can be used more efficient and effective, thus fostering growth. However, the tool also has a couple of shortcomings, which presently give rise to the development of a new generation of SCM (SCM 2.0).

Introduction

The Standard Cost Model (SCM) is a widely used remedy against certain kinds of red tape. It belongs to the family of devices for less and better regulation, nowadays handled under the more handy label “smart regulation” (see: http://www.oecd.org/regreform/policyconference/46528683.pdf.) This model aims at identifying and measuring the administrative burdens of businesses. Thus, it is an indispensable prerequisite for steps towards the...

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References

  1. Leibenstein H (1966) Allocative efficiency vs. “X-efficiency”. Am Econ Rev 56(3):392–415Google Scholar
  2. Nijsen A et al (eds) (2009) Business regulation and public policy. Springer, New YorkGoogle Scholar
  3. Torriti J (2007) The Standard Cost Model: When better regulation fights against red-tape (March, 18 2009). In: Weatherill S (ed) Better regulation. Hart, Oxford. Available at SSRN: https://ssrn.com/abstract=1363986Google Scholar
  4. Wegrich K (2009) The administrative burden reduction policy boom in Europe: comparing mechanisms of policy diffusion. CARR discussion papers, DP 52. Centre for Analysis of Risk and Regulation, London School of Economics and Political Science, London. ISBN 9780853281443Google Scholar
  5. Weigel W (2008) The Standard Cost Model – a critical appraisal (September 17, 2008). 25th annual conference of the European Association of Law and Economics. Available at SSRN: https://ssrn.com/abstract=1295861 or  https://doi.org/10.2139/ssrn.1295861

Copyright information

© Springer Science+Business Media, LLC, part of Springer Nature 2018

Authors and Affiliations

  1. 1.Faculty of Business, Economics and Statistics, Department of EconomicsJoseph von Sonnenfels Center for the Study of Public Law and EconomicsViennaAustria