Abstract
Economic regulation is pervasive and takes on many faces, some of which are ignored in the literature, and in which the objectives and policies of the regulatory agency are uncertain. Examples include legalized gambling, licensing of taxicabs and tow truck operators and agricultural market orders and allotments. Common to this class of regulatory activities are multiple instruments of regulation and unclear objectives of the regulatory agency. Multiple policy instruments are used in regulating legalized gambling; the case we analyze is horse racing. These regulatory instruments generally include the expected price of betting (the proportion of bets not returned to winners) and the availability of betting opportunities including the number of establishments, their location, hours of operation, employee licensing and drug testing. The objectives of regulatory agencies overseeing legalized gambling are often unknown or are ambiguous. Welfare maximization and efficiency are the common regulatory objectives assumed in the literature. We, however, consider a broader set of goals. We consider three specific alternative pragmatic objectives:
Published Version
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