The political economy of industrial regulations : a survey with implications for regulation studies in developing countries

The purpose of this paper is twofold. (1) It surveys the main empirical findings of the last 20 years of research in the political economy of regulation. (2) It is also intended to help in the development of a methodological framework for future regulatory research in developing countries. Three main implications are derived from this survey: (a) the enactment of a regulation requires the development of a political coalition. Thus, it's enactment will require regulatory adjustments to the interests of the different groups of customers and producers; (b) regulations will have side or unpredicted effects, such as the reduction in the extent of competition among firms, inefficient use of inputs, suboptimal provision of quality, or inefficient pricing policies; (c) regulations adjust to changes in the environment. This adjustment, however, may be conditioned by the current political institutions, which may retard or facilitate the regulatory changes.