TY  - JOUR
AU  - Spiller,Pablo T.
TI  - Transaction Cost Regulation
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 16735
PY  - 2011
Y2  - January 2011
UR  - http://www.nber.org/papers/w16735
L1  - http://www.nber.org/papers/w16735.pdf
N1  - Author contact info:
Pablo T. Spiller
University of California
Walter A. Haas School of Business
Faculty Bldg. 593
Berkeley, CA 94720
Tel: 510/642-1502
Fax: 510/642-2826
E-Mail: spiller@haas.berkeley.edu
AB  - This paper discusses the fundamental underpinnings and some implications of transaction cost regulation (TCR), a framework to analyze the interaction between governments and investors fundamentally, but not exclusively, in utility industries.  TCR sees regulation as the governance structure of these interactions, and thus, as in standard transaction cost economics, it places emphasis in understanding the nature of the hazards inherent to these interactions.  The emphasis on transactional hazards requires a microanalytical perspective, where performance assessment is undertaken within the realm of possible institutional alternative. In that sense, politics becomes fundamental to understanding regulation as the governance of public / private interactions. The paper discusses two fundamental hazards and their organizational implications: governmental and third party opportunism. Both interact to make regulatory processes and outcomes more rigid, formalistic, and prone to conflict than envisioned by relational contracting.
ER  -