In 2004 Logan, Utah, saw the opportunity to place a turbine within the city’s culinary water system. The turbine would reduce excess water pressure and would generate clean, low-cost electricity for the city’s residents. Federal funding was available, and the city qualified for a grant under the American Recovery and Reinvestment Act. Unfortunately, Logan City found that a complex and costly federal nexus of regulatory requirements must be met before any hydropower project can be licensed with the Federal Energy Regulatory Commission. This regulation drove up costs in terms of time and money and, as a result, Logan City is not planning to undertake any similar projects in the future. Other cities have had similar experiences to Logan’s, and we briefly explore these as well. We find that regulation is likely deterring the development of small hydropower potential across the United States, and that reform is warranted.
The Consumer Financial Protection Bureau (CFPB) is considering new regulation of payday lending and bank overdraft protection. The Dodd-Frank Act, which established the CFPB, recognizes that consumers benefit from competition among providers of consumer credit products. That law requires the CFPB to preserve fair competition by providing consistent regulatory treatment of similar products offered by both bank and nonbank lenders. We illustrate how this mandate for fair competition applies to the regulation of payday lending and bank overdraft protection, products that are offered by different entities but attract an overlapping customer base, compete with each other directly, and raise similar consumer protection concerns. Unequal regulation would provide a competitive advantage for one product over another, resulting in reduced choice and higher prices for consumers, without a corresponding increase in consumer protection. Therefore, as the CFPB considers new regulation of these products, it should be careful to regulate them similarly to preserve fair competition.
We mine two underexplored traditions for insights into intellectual property: the public choice or Virginia school, centered on James Buchanan and Gordon Tullock, and the Bloomington or Institutional Analysis and Development school, centered on Elinor Ostrom and Vincent Ostrom. We apply the perspectives of each school to issues of intellectual property and develop new insights, questions, and focuses of attention. We also explore tensions and synergies between the two schools on issues of intellectual property.
Automobiles are ubiquitous. Most Americans take at least one car trip every day to get to work or school or to run household errands. The automobile has also never been safer. New technology has brought car frames that crumple to reduce the impact of a crash, airbags that cushion the blow of an accident, and cameras that show drivers what is behind the vehicle. In addition, rising standards of living have allowed consumers to purchase more safety equipment and to question the environmental impact of cars. While cleaner, safer automobiles certainly have benefits, as economists, we must ask, what do all these regulations cost the consumer? Costs arise from three sources: workplace safety regulation, environmental regulation, and consumer safety regulation. In this paper, we examine each area in turn, focusing on how the cost of regulations impacts the average automobile consumer.
Section 5 of the Federal Trade Commission (FTC) Act gives the FTC an undefined mandate to prosecute “unfair methods of competition.” For nearly 100 years, the Commission has searched tirelessly for the meaning of this amorphous concept. Since 1992, the FTC has continued to define Section 5 through a series of consent decrees. Absent any external constraint, the FTC appears to have broad discretion to define the reach of Section 5 beyond the Sherman Act. This discretion causes uncertainty, which is likely to deter beneficial conduct.
This essay is written for a symposium on Luigino Bruni’s The Genesis and Ethos of the Market. That book identifies a tradition of Neapolitan civil economy that arose in the 18th century, and which the author opposes to the more familiar tradition of Smithian political economy. The difference in traditions is located in contrasting theories of society in which markets are situated.
James Buchanan’s Public Principles of Public Debt is universally associated with the claim that debt allows the cost of public activity to be shifted onto future generations. This claim treats a generation as a unitary and acting entity. While such treatment is standard fare for macro theorists who work with representative agents and societal averages in place of the individuals who constitute a society, such treatment conflicts with Buchanan’s Cost and Choice and, indeed, his entire oeuvre.
This paper analyzes the characteristics of banks that received emergency loans from the Federal
Reserve during the recent financial crisis. Using unique data consisting of emergency loan
transactions, I provide evidence that larger banks, in terms of assets and market capitalization,
were more likely to receive emergency support.
Hayek argued that the central question of economics is the coordination problem: How does the spontaneous interaction of many purposeful individuals, each having dispersed bits of subjective knowledge, generate an order in which the actors’ subjective data are coordinated in a way that enables them to successfully dovetail their plans and activities?
Many Americans take it for granted that the federal government should regulate the transportation sector in the United States and continue to provide funding for transportation infrastructure, particularly highways and urban mass transit. Yet an economic and historical analysis raises questions about how much government safety regulation is necessary and whether private firms or state and local governments could provide infrastructure more efficiently.
To explore the fiscal realities of the ACA and discuss principles for successful healthcare reform, the Mercatus Center at George Mason University hosted a new Capitol Hill Campus featuring Dr. Robert Graboyes, Mercatus Center senior research fellow specializing in the economics of healthcare. This discussion concentrated on the economic implications of healthcare reform.
For an exploration of the economic situation and more, the Mercatus Center at George Mason University invites you to join Dr. Bruce Yandle as he presents a year end, quarterly economic commentary and discusses the outlook for the year ahead.
Mercatus Senior Research Fellow Keith Hall explains the economics behind the jobs numbers and how to read between the lines to get a better understanding of what they mean for our economy and different groups of Americans.
In this book, Paul Dragos Aligica discusses some of the most challenging ideas emerging out of the research program on institutional diversity associated with Elinor Ostrom and her associates, while outlining a set of new research directions and an original interpretation of the significance and future of this program.