Study-Unit Description

Study-Unit Description


CODE PPL4223

 
TITLE Regulatory Policy and Institutions

 
UM LEVEL 04 - Years 4, 5 in Modular UG or PG Cert Course

 
MQF LEVEL Not Applicable

 
ECTS CREDITS 6

 
DEPARTMENT Public Policy

 
DESCRIPTION Economic liberalisation, globalisation and, lately, economic crisis have led to an unprecedented number of regulatory and legislative reform initiatives in many regional economic pacts and in the domestic markets of most states. These changes were conceived mainly to increase the so-called “social welfare” – a concept that is supposed to measure societal well-being. In practice, this has taken the form of private sector competition-augmenting regulation, regulation intended to cut administrative burdens to incentivize the relocation or retention of businesses to a particular jurisdiction in an increasingly competitive world and to regulate newly-liberalised markets in fields such as telecommunications, energy, water and transport (the public utilities).

The role, effectiveness and accountability of these regulatory bodies and instruments is a leading issue within public policy, with its own political context, actors, problems, rules of interaction, instruments, activities and impacts. In order to promote a better understanding of the issues concerning the regulatory functions of public and private bodies, operating at the domestic and international levels.

The study-unit covers the theoretical and practical aspects of regulation and can be said to be broadly divided over 7 main modules.

The first module looks at the emergence of regulation in history and its necessity for civilisation to evolve.

The second one looks at the context in which regulations must be crafted, implemented and enforced and at the influences that social mores and norms, markets, systemic features and the law can have on regulation.

The third modules then looks at regulation as a precondition for social development, economic advancement and prosperity by providing a taxonomy of markets and looking into how each of these markets would be affected in the absence of regulation.

The fourth module develops this model further and applies it to areas where no intrinsic market(s) exist.

The fifth module looks at well-established regulatory principles and at the different levels of jurisdiction that can be involved in regulation (i.e. international, supranational, national, and regional) and goes on to identify the differences.

The sixth module looks at price regulation and delves into accounting and economic complexities and the incentives that wholesale or retail regulation can give rise to. It does so with reference to EU competition legislation and case law.

The seventh and last module looks at better regulation and the Standard Cost Model (SCM). It identifies the pros and cons of the SCM and tries to compare the administrative burden of Maltese regulation to the administrative burden of other EU countries.

This study-unit covers concerns related to designing, managing and reforming regulatory regimes. Students will explore these concerns through scholarly studies, official reviews and case studies:

(a) Regulation and Governance: What does regulation contribute towards good governance? Why do governments regulate? What is the relationship between markets and regulators? Can regulation limit corruption? Did poor regulation lead the world to one of its worst global crises?

(b) Regulation and Foreign Investment: What are regulatory indicators? Why are such indicators important to foreign investors? Do regulatory frameworks affect the ‘business environment’?

(c) Public and Private Regulatory Regimes: What are their purposes and characteristics? Do they contribute towards fair play in the open market? Do they promote consumer rights? Are they really independent? Do they suffer from pitfalls and constraints? What type of criticism do they usually face? What lessons can we derive from success stories?

(d) International Regulatory Regimes: Has globalization diluted the power of national governments to regulate their own economies or to set global regulatory agendas? What is the role of international regulatory regimes in such sectors as internet governance and privacy, international finance and financial crises, genetically modified organisms, and the conflict between intellectual property and public health?

(e) The EU as a regulatory polity: The European Union has long since been depicted as a "regulatory polity", and the quality of the EU's regulatory output long derided and debated. What are the EU mechanisms through which regulation can be drafted and enforced. Is there an implementation deficit? Why is there a common call for more centralised regulation at EU level, while others still profess a decentralised approach based on the subsidiarity principle?

(f) Reforming Regulatory frameworks: Why is there a need for constant reform? What are the internal and external sources of change? How is reform to be planned and implemented in regulatory affairs? Who is to be involved in the reform architecture? What is the impetus of consultation and transparency in such processes? In what ways do regulatory reforms affect the ‘business climate’ for better or for worse?

(g) Case Studies: Students will be given the opportunity to conduct applied research on one or more of the following domestic regulatory institutions: Awtorita' dwar il-Lotteriji u l-Logħob, Awtorita' dwar is-Saħħa u s-Sigurtà fuq ix-Xogħol, Awtorita' għas-Servizzi Finanzjarji ta' Malta, Awtorita' Marittima ta' Malta, Awtorita' ta' Malta dwar il-Komunikazzjoni, Awtorita' ta' Malta dwar l-Ambjent u l-Ippjanar, Awtorità dwar it-Trasport ta' Malta, Awtorità Maltija dwar l-iStandards, Awtorità Maltija tat-Turiżmu, Awtorità Nazzjonali għall-Implimentazzjoni tal-konvenzjoni dwar Armi Kimiċi, Awtorità Nazzjonali tax-Xogħol, Awtorità tal-Istatistika ta' Malta, Awtorità tax-Xandir, Awtorità tad-Djar, Il-Kunsill Nazzjonali tal-Ilsien Malti.

Study Unit Aims

This study-unit presents regulation and regulatory regimes as integral components of contemporary public policy. It is intended to give students a sound understanding of the making of regulatory policies and institutions, the principles and pitfalls of regulatory policy operating within domestic, regional and international arenas, the politics of regulation, and an ability to analyse the performance of regulators.

Learning Outcomes:

1. Knowledge and Understanding:
By the end of the study-unit the student will be able to:

• Comprehend how regulation has developed historically and the different outcomes that different regulatory regimes have been conducive to;
• Develop an appreciation of regulation within the wider picture involving social norms and mores, the legal framework, markets and systemic features;
• Demonstrate an understanding of the regulatory principles and the role of governments as part of good governance;
• recognise the effect of regulatory frameworks on corruption and how incentive mechanism design can mitigate or exacerbate corruption;
• decipher the implications of effective regulation on the domestic business environment;
• identify the typology of regulatory regimes at the domestic, regional and international levels;
• Comprehend the role of regulation within a political framework;
• appreciate the extent to which markets (as well as what type of markets) and regulation work in consonance with one another and the instances where they undermine each other;
• Comprehend the importance of separation of powers in regulatory contexts;
• Demonstrate an understanding of redress mechanisms and their importance in regulation;
• appreciate issues at the forefront of the current regulatory agenda in regulation;
• examine the European Union's regulatory role.

2) Skills:
By the end of the study-unit the student will be able to:

• collect and analyse data on specific domestic regulatory regimes;
• write case studies dealing with specific regulatory scenarios;
• determine the likely impact of specific regulations and regulatory policies;
• appraise regulatory scenarios.

Reading List:

Compulsory Reading:

Olson, M. (2000). Power and prosperity : outgrowing communist and capitalist dictatorships. New York, Basic Books.
The Politics of Government Decision-Making: A Theory of Regulatory Capture, Jean-Jacques Laffont; Jean Tirole, The Quarterly Journal of Economics, Volume 106, Issue 4 (Nov., 1991), 1089-1127. < http://links.jstor.org/sici ?sici=0033-5533%28199111%29106%3A4%3C 1089%3ATPOGDA %3E2.0.C0%3B2-J >
NBER Working Paper Series, Toward A More General Theory Of Regulation, Sam Peltzman, Working Paper No. 133, Center For Economic Analysis Of Human
Behavior And Social Institutions, National Bureau of Economic Research, Inc., April 1976.
Carpenter, D. 2004. “Protection without Capture: Product Approval by a Politically Responsive Learning Regulator”. American Political Science Review . 98(4):613-631.
Torriti, J., The Standard Cost Model: When Better Regulation Fights against Red-Tape (March, 18 2009). Better Regulation, Weatherill, S., ed., Oxford: Hart, 2007.
Bös, D. and D. P. e. e. Bös (1994). Pricing and price regulation : an economic theory for public enterprises and public utilities. Amsterdam ; Oxford, North-Holland.
Handbook for Evaluating Infrastructure Regulatory Regimes. Washington: The World Bank.
Drezner, D.W. (2007), All Politics Is Global: Explaining International Regulatory Regimes. Cambridge, Ms: Princeton University Press.
Hussein K.; Anand M. (eds). (1996), The Regulatory Role of the EU, The European Union and National Industrial Policy, Basingstoke: Routledge.
Majone, G. (2006), ‘A European Regulatory State’ in Jeremy Richardson European Union: Power and Policy-Making. Basingstoke: Routledge.

Optional Reading:

Coglianese, C. and R. A. Kagan (2007). Regulation and regulatory processes. Aldershot, Hampshire, England ; Burlington, VT, Ashgate.
Rawls, J. (2005). A theory of justice. Cambridge, Mass., Belknap Press.
Rawls, J. and S. R. Freeman (1999). Collected papers. Cambridge, Mass., Harvard University Press.
Mirowski, P. (1989). More heat than light : economics as social physics, physics as nature's economics. Cambridge; New York, Cambridge University Press.
Hobbes, T. and I. Shapiro (2010). Leviathan, or, The matter, forme, & power of a common-wealth ecclesiasticall and civill. New Haven Conn., Yale University Press.
Spencer, H. (1982). The man versus the state: with six essays on government, society, and freedom. Indianapolis, Ind., Liberty Classics.
Mill, J. S. (2010). On liberty. London, Penguin.
Marx, K., B. Fowkes, et al. (1990). Capital: a critique of political economy. London, Penguin in Association with New left review.
Proudhon, P. J., D. R. Kelley, et al. (1994). What is property? Cambridge, Cambridge University Press.
Hayek, F. A. v. (1949). Individualism and economic order: Essays. London, Routledge & K. Paul.
Hayek, F. A. v., W. W. Bartley, et al. (2009). The trend of economic thinking: essays on political economists and economic history. Indianapolis, Ind., Liberty Fund.
Hayek, F. A. v. and B. Caldwell (2007). The road to serfdom: text and documents. Chicago, University of Chicago Press.
Large Electorates and Decisive Minorities, Colin M. Campbell, Journal of Political Economy Vol. 107, No. 6 (December 1999), pp. 1199-1217
Borenstein, S., M. R. Busse, et al. (2007). Principal-agent incentives, excess caution, and market inefficiency : evidence from utility regulation. Cambridge, Mass., National Bureau of Economic Research.
Free Market Fantasies: Capitalism In The Real World (Audio CD)
Baker, R. (2010). Weighting and valuing quality-adjusted life-years using stated preference methods : preliminary results from the social value of a QALY project. Southampton, NETSCC.
Radaelli, C. M. and F. De Francesco (2007). Regulatory quality in Europe: concepts, measures and policy processes. Manchester, Manchester University Press.
Ogus, A. (2002). Comparing regulatory systems: institutions, processes and legal forms in industrialised countries. Manchester, Centre on Regulation and Competition.
Baum, L., "Understanding Courts as Policy-makers," American Bar Foundation Research Journal, Winter, 1983, 241-250.
Hamilton, J. T. E. (1994). Regulating regulation: the political economy of administrative procedures and regulatory instruments: Conference : Papers, Duke University School of Law.
Olson, M. (1977). The Logic of Collective Action: Public Goods and the Theory of Groups. Cambridge Massachusetts and London, Harvard University Press.
Weatherill, S. and Clifford Chance (Firm) (2007). Better regulation. Oxford, Hart.
Barazzoni, F., F. Cerri, et al. (2006). Cutting red tape: national strategies for administrative simplification. Paris, France, Organisation for Economic Co-operation and Development.
Gordon, S. and C. (2005), Flexing Muscle: Corporate Expenditures as Signals to the Bureaucracy,. American Political Science Review, 99(2), 245-61.
Verch, H., and Johnson, L., "Behavior of the Firm Under Regulatory Constraint, American Economic Review, Vol 52, 1962, pp. 1053-1069.

 
STUDY-UNIT TYPE Lecture and Seminar

 
METHOD OF ASSESSMENT
Assessment Component/s Sept. Asst Session Weighting
Assignment Yes 30%
Examination (3 Hours) Yes 70%

 
LECTURER/S Edward Warrington

 

 
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It should be noted that all the information in the description above applies to study-units available during the academic year 2023/4. It may be subject to change in subsequent years.

https://www.um.edu.mt/course/studyunit