THE EVOLUTION OF THE ECONOMIC ANALYSISAND ITS INFLUENCE ON THE THEORY OFECONOMIC REGULATION

Abstract

The economic analysis of law transformed legal scholarship by
applying price theory and rational choice assumptions to the analisys
of legal rules and institutions. This methodological innovation
fundamentally reshaped the theory of economic regulation, moving it
from normative public interest models toward positive explanations of
regulatory outcomes. The primary aim of instituting economic
regulation is to safeguard the efficient functioning of the market,
prevent deceptive practices and negative spill over effects, while
ensuring level playing field and consumer rights. However, economic
regulation and market operations are not without flaws, often resulting
in a mix of positive outcomes and unintended burdens, including
implementation costs and potentially detrimental repercussions. This
paper endeavours to revisit the foundational concepts of the theory of
economic regulation, which originated from the economic analysis of
legal frameworks. The theory emerged from the necessity to conduct
empirical evaluations of the costs and benefits associated with specific
legislative measures. Furthermore, it operates within the broader
economic and social contexts that are not only dynamic but also
exhibit cyclical patterns. The purpose of this paper is twofold, firstly,
to analyse the pivotal thinkers who have significantly influenced the
formation of this scholarly theory and to scrutinize their contributions to the advancement of economic regulation theory; and secondly, to
extract insights and offer guidance that are applicable to contemporary
economic regulatory practices.