‘reflexive’ Market Regulation: Cognitive Cooperation in Competitive Information Fora

Eric Brousseau (EconomiX, Universite Paris Ouest)
Jean-Michel Glachant (European University Institute)

Abstract: The ‘New’ economics of regulation based on incentives, as exemplified by Laffont and Tirole (1993), consists of attempting to obtain the results of competition when competition cannot be implemented. Incentive mechanisms are nothing but means of transacting information as a hidden good needed to efficiently perform a given (regulatory) transaction. Their implementability relies on perfect knowledge by the ‘principal’ of all the dimensions of the coordination problem in question when dealing with an ‘agent’. As pointed out by Brousseau and Glachant (2010), when such knowledge is unavailable, a way of managing the regulatory game is to develop a pseudo and competitive market for information in which the various stakeholders are incited to disclose information and share knowledge. This is the logic of the new form of regulation, whereby the regulator in charge of completing and redrafting the ‘rules of the game’ in an industry organizes de facto a forum accessible by all stakeholders. These later compete to influence the regulator, which leads them to disclose information

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