Abstract
This chapter examines the motives underlying regulation, first by considering the technical justifications for regulating that may be given by a government that is assumed to be acting in pursuit of the public interest. It then discusses rationales for regulating that can be described as instances of ‘market failure’, with particular reference to monopolies and natural monopolies, windfall profit (also known as ‘economic rent’), externalities (or ‘spillovers’), information inadequacies, continuity and availability of service, anti-competitive behaviour and predatory pricing, public goods and moral hazard, unequal bargaining power, scarcity and rationing, rationalisation and coordination, and planning. It also looks at rights-based and social rationales for regulating.
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