Regulation: A Transaction Cost Perspective

by Pablo Spiller



In this essay I recount, through a brief introduction to how I see the transactions cost theory of regulation, the immense impact of Oliver Williamson’s writings and thoughts on contracting and organizations on my own thinking and research on the economics of regulation. TCR, as I see it, has two fundamental underpinnings. First and foremost, Williamson’s transaction cost economics approach, and, because regulation is inherently political, also on positive political theory. Following Williamson’s TCE approach, I discuss the fundamental hazards inherent to government/utility-investors’ interactions and how these hazards impact on the way regulation develops depending on the institutional environment within which these interactions take place.

California Management Review

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