Building An Institutionalist Theory of Regulation
Recent changes in the U.S. regulatory environment require reexamination of our ideas of how and why regulation evolves. With a century of experience since the creation of the Interstate Commerce Commission, two decades of "new wave" social regulation behind us, and a recent period of upheaval and uncertain direction, we find that neither traditional market failure rationales, nor private interest group theories like George Stigler's, can provide adequate explanation for the historical pattern of regulatory development. In this article I shall argue that a satisfactory theory must account for the changes in social conditions over time that affect which regulations will be politically viable. The basic pattern I wish to explain is the preponderance of "economic" regulation up to around 1970, followed by a great increase in efforts at "social" regulation. Further, I will center on the idea that much of the earlier economic regulation was of the "revenueaugmenting" type detrimental to social welfare, and that the newer social regulation is largely of the "cost-augmenting" type detrimental to industry interests. Needless to say, this generalization does not hold for all regulatory efforts, and it ignores some interesting chapters of history within the broader trend.' Nonetheless, for my analysis I will take that view as at least partially accurate; for example, I accept the argument