Full Summary – Administrative Law & Market
Regulation
,WEEK 1
3 examples of market failure – Dieselgate, Theranos, and FTX scandal. They all point that there
must be more efficient market regulation.
What is market regulation?
Regulation’s 3 core functions… (Functional view)
1. Capacity for standard setting, (distinction between more and less preferred aspects of the
system)
2. Capacity for information gathering, (producing knowledge about current or changing
aspects of the system)
3. Capacity for behaviour modification. (change the state of the system)
In terms of its scope…
1. Regulation in the narrow sense (state is deliberately trying to change social behaviour)
2. Regulation in the broad sense (all institutions can intentionally or non-intentionally
control social behaviour)
3 principal issues of market regulation…
1. Goal or outcome to be achieved?
2. Standard of conduct required from market participants?
3. Enforcement techniques that are fit to ensure compliance?
Relation to law Facilitative & expressive roles of law
1. Facilitative: Shaping social behaviour in the market so that transactions could be
facilitated by law. Law is a regulatory instrument.
2. Expressive: Law giving expression to certain constraints to market regulation. E.g: Rule
of law, principle of good administration.
Divide between public & private law…
Private: Interpersonal justice – balance between parties’ interests regarding their respective
rights. Remedies & damages also here. Ex-post character remedies for the private parties &
compensation. Horizontal relationship.
Public: Distributive justice – Social distribution of goods in society. E.g: Taxes, since they are
equally distributed amongst the people. Ex-ante character compliance & deterrence sought.
Vertical relationship.
Relationship between constitutional & administrative law?
- Constitutional law sets a framework for the relationship between the citizens & state
whereas adm. law provides much more specific rules to be complied with in these
vertical relations.
- Adm. law monitors constitutional rights since they provide a certain form & shape to the
latter.
, French approach: Adm. law exists to organise the government & its public authorities.
German approach: Adm. law exists to protect citizens from the actions of their own
government.
US approach: Adm. law exists to establish & operate public regulatory bodies.
In cases where private and public interests are contrasted, the private interests are always
perceived from both sides (e.g: business profits vs. individual consumer protection), however,
public interests are simply listed after one another (well-functioning of the market, consumer
protection, environmental protection etc). These are also listed in the lecture 2 slides for week 1.
Public interest theories – law pursues a facilitative role here
- Economic version: Economic efficiency – Core collective goal pursued by regulation.
Market regulation must uphold efficient allocation of resources. But… markets are not
efficient in real life because market failures happen often thus regulation is a response
to market failures (such as public goods, monopolies, informational deficits etc).
Correction of these failures would improve general welfare and support public interest.
- Political version: Pursuit of public interests other than economic efficiency also justifies
regulation. Hard & soft paternalism: Law forces people to abide by certain rules OR
law nudges people to avoid certain risks.
Private interest theories – a critique to the public interest theories
- Regulation emerges to maximize private interests of certain individuals/groups.
Regulation essentially promotes private interests; public interests are coincidental.
- Regulatory failure Costs of regulation outweighs the benefits because the core tasks
of regulation are poorly discharged. In the end, the regulation fails to achieve its
objectives.
- Regulatory capture A way in which regulatory failure can happen. Occurs when
regulatory officials develop such close relations with the regulated entities that private
interests are pursued more than public interests.
Facilitative role: The law has a facilitative role here as well, however, it is more about ending
a system that undermines collective welfare. Regulatory failures result in such undermining of
the public interests.
The private interest theories are criticized for not having so much distinction from the
public interest theories and also assuming the behaviours of the elected officers, prejudice to
their “bad” behaviour.
In conclusion… Regulation must serve the public interest ideally but this may not always be the
case if it is a case where they are dominated by private actors. Private interests are naturally
always affected by public interests. It poses a danger when public regulators act in favour of
private interests.
Regulation
,WEEK 1
3 examples of market failure – Dieselgate, Theranos, and FTX scandal. They all point that there
must be more efficient market regulation.
What is market regulation?
Regulation’s 3 core functions… (Functional view)
1. Capacity for standard setting, (distinction between more and less preferred aspects of the
system)
2. Capacity for information gathering, (producing knowledge about current or changing
aspects of the system)
3. Capacity for behaviour modification. (change the state of the system)
In terms of its scope…
1. Regulation in the narrow sense (state is deliberately trying to change social behaviour)
2. Regulation in the broad sense (all institutions can intentionally or non-intentionally
control social behaviour)
3 principal issues of market regulation…
1. Goal or outcome to be achieved?
2. Standard of conduct required from market participants?
3. Enforcement techniques that are fit to ensure compliance?
Relation to law Facilitative & expressive roles of law
1. Facilitative: Shaping social behaviour in the market so that transactions could be
facilitated by law. Law is a regulatory instrument.
2. Expressive: Law giving expression to certain constraints to market regulation. E.g: Rule
of law, principle of good administration.
Divide between public & private law…
Private: Interpersonal justice – balance between parties’ interests regarding their respective
rights. Remedies & damages also here. Ex-post character remedies for the private parties &
compensation. Horizontal relationship.
Public: Distributive justice – Social distribution of goods in society. E.g: Taxes, since they are
equally distributed amongst the people. Ex-ante character compliance & deterrence sought.
Vertical relationship.
Relationship between constitutional & administrative law?
- Constitutional law sets a framework for the relationship between the citizens & state
whereas adm. law provides much more specific rules to be complied with in these
vertical relations.
- Adm. law monitors constitutional rights since they provide a certain form & shape to the
latter.
, French approach: Adm. law exists to organise the government & its public authorities.
German approach: Adm. law exists to protect citizens from the actions of their own
government.
US approach: Adm. law exists to establish & operate public regulatory bodies.
In cases where private and public interests are contrasted, the private interests are always
perceived from both sides (e.g: business profits vs. individual consumer protection), however,
public interests are simply listed after one another (well-functioning of the market, consumer
protection, environmental protection etc). These are also listed in the lecture 2 slides for week 1.
Public interest theories – law pursues a facilitative role here
- Economic version: Economic efficiency – Core collective goal pursued by regulation.
Market regulation must uphold efficient allocation of resources. But… markets are not
efficient in real life because market failures happen often thus regulation is a response
to market failures (such as public goods, monopolies, informational deficits etc).
Correction of these failures would improve general welfare and support public interest.
- Political version: Pursuit of public interests other than economic efficiency also justifies
regulation. Hard & soft paternalism: Law forces people to abide by certain rules OR
law nudges people to avoid certain risks.
Private interest theories – a critique to the public interest theories
- Regulation emerges to maximize private interests of certain individuals/groups.
Regulation essentially promotes private interests; public interests are coincidental.
- Regulatory failure Costs of regulation outweighs the benefits because the core tasks
of regulation are poorly discharged. In the end, the regulation fails to achieve its
objectives.
- Regulatory capture A way in which regulatory failure can happen. Occurs when
regulatory officials develop such close relations with the regulated entities that private
interests are pursued more than public interests.
Facilitative role: The law has a facilitative role here as well, however, it is more about ending
a system that undermines collective welfare. Regulatory failures result in such undermining of
the public interests.
The private interest theories are criticized for not having so much distinction from the
public interest theories and also assuming the behaviours of the elected officers, prejudice to
their “bad” behaviour.
In conclusion… Regulation must serve the public interest ideally but this may not always be the
case if it is a case where they are dominated by private actors. Private interests are naturally
always affected by public interests. It poses a danger when public regulators act in favour of
private interests.
