Comments on: Why we oppose regulation.

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By: ik

ik — Wed, 30 Nov 2005 15:29:50 +0000

I dont know the story about the petrol pumps ruled by ruthless criminals.
But regulations in industries is by and large a bad idea. (exceptions are there. antitrust laws, patent protections, network externalities etc., and many times it becomes tricky to enforce regulations in these cases because of the lack of complete information. i.e. a need for regulation is obvious but how to implement it isn’t because even the government doesnt have complete information)

regarding free market not guraneeting quality is basically missing the point. Free markets are there to produce efficient outcome. not to gurantee quality. Most of the times it will ensure quality.

Another thing, one of the reasons why free/competitive markets might not work is because of the absence of a body to enforce contractual obligations and make sure laws are followed. A wek or corrupt justice system is more likely to be a problem in case of thugs ruling in market (you can’t really say that its a free market anymore if contractual obligations are not being enforced). And the remedy should be to improve the justice system and put in place a system to make sure contactual obligations are followed and it shouldnt be regulations

By: Vivek G

Vivek G — Wed, 30 Nov 2005 05:19:51 +0000

On this topic, here is a very pertinent link on the law on unintended consequences: http://www.econlib.org/library/Enc/UnintendedConsequences.html

By: Zero

Zero — Tue, 29 Nov 2005 06:55:16 +0000

If there are plenty of well paying jobs, most criminals will quit their criminal activity and will seek real jobs.
I am not into much of economy and all that. But, I think this is clearly wrong. If this was/is the right way, human race was/is never that dumb not to realise it.

By: Theesra

Theesra — Tue, 29 Nov 2005 04:46:34 +0000

Regulation, by itself, is not wrong, or harmful. It is surely needed in complex industries, where people are unable to determine for themselves if the provider is doing right. Telecommunications, for instance….petro products is another.

But, our problem comes from faulty method of regulating. Putting up laws is not sufficient enough to regulate. Monitoring and feedback systems are what complete the cycle, and that is rarely in place. If it is in place, it is inadequate, or improper, like the IOC inspection system.

What is needed is the ability for the market, and the consumers to provide the feedback. Nothing will hurt like losing customers, and no amount of inspections from suppliers is going to matter as much. Now, the challenge is for the regulator to find ways for the market to know details and provide appropriate feedback.

By: Neeraj Krishnan

Neeraj Krishnan — Tue, 29 Nov 2005 04:40:00 +0000

A very intersting article. Some comments and questions:

0. this thing has been around!
http://www.ask.com/web?q=diesel+adulteration+with+kerosene+india&qsrc=0&o=0

1. Retail price of diesel is 30.45 Rs/litre and of (PDS) kerosene is 9.05 Rs/litre
http://www.ppac.org.in/oil_prices_taxes.htm

Given that kerosene is subsidised around Rs 10/litre
(missing citation, will put it in when I find it :) )
that still leaves a Rs 15/litre price difference.

So subsidy or not, adulteration there will be?

By: sv

sv — Tue, 29 Nov 2005 01:54:40 +0000

“These are the guys who will run loose if you remove all regulations. Do you still say that a free market is the way to go”

If you remove regulations, there will be more economic activity and more jobs. If there are plenty of well paying jobs, most criminals will quit their criminal activity and will seek real jobs.