Synthesis documents

'Too Small to Regulate', Basu and Dixit, World Bank Working Paper, 2014

    Description
    Informal industries and markets, with many small producers and suppliers, are generally more difficult and expensive to regulate than their organized counterparts, dominated by larger corporations.

    There is potential for the state's regulatory function to be parceled and delegated to private corporations. Again, large firms are better vehicles for taking over some of these 'governmental tasks'.

    Whilst the authors do not deny that competitive industries keep prices lower for consumers and generate more total economic surplus than monopolistic or oligopolistic firms, they do argue that in today’s world where the regulatory tasks are large and multiplying, there is trade-off that has to be kept in mind when national antitrust and competition policies are designed.

    See the authors' blog post about their paper at http://blogs.worldbank.org/developmenttalk/too-small-regulate-blog