Book contents
- Frontmatter
- Contents
- List of contributors
- Foreword
- Disclaimer
- Acknowledgements
- List of abbreviations
- 1 An introduction to domestic regulation and GATS
- Part I Impediments to services trade, regulatory theory and principles
- 2 Why regulate? An overview of the rationale and purpose behind regulation
- 3 Domestic regulation: what are the costs and benefits for international trade in services?
- Part II Legal perspectives on WTO principles and domestic regulations
- Part III Case studies
- Part IV Concluding remarks
- Index
- References
2 - Why regulate? An overview of the rationale and purpose behind regulation
Published online by Cambridge University Press: 05 April 2014
Book contents
- Frontmatter
- Contents
- List of contributors
- Foreword
- Disclaimer
- Acknowledgements
- List of abbreviations
- 1 An introduction to domestic regulation and GATS
- Part I Impediments to services trade, regulatory theory and principles
- 2 Why regulate? An overview of the rationale and purpose behind regulation
- 3 Domestic regulation: what are the costs and benefits for international trade in services?
- Part II Legal perspectives on WTO principles and domestic regulations
- Part III Case studies
- Part IV Concluding remarks
- Index
- References
Summary
Introduction
The starting point for any economist is the superiority of the market mechanism of free exchange in efficiently allocating resources and thereby maximizing social welfare. However, in order for that ‘invisible hand’ to perform its winning act, the market needs to display certain characteristics:
there must be a large number of producers of homogeneous products who are sufficiently small and identical so as not to be capable of exercising a great deal of influence on the price level (price-takers) of those products;
all market participants must have full information about the prices and quality of all products available in the market;
there should be neither ‘externalities’ nor ‘public goods’.
If these conditions are not met, society’s scarce resources will not be put to their highest valued use and the market is deemed to suffer from so-called market failures, which could possibly justify regulatory intervention. As we will see, the characteristics of many services sectors make them particularly susceptible to market failures.
- Type
- Chapter
- Information
- WTO Domestic Regulation and Services TradePutting Principles into Practice, pp. 25 - 46Publisher: Cambridge University PressPrint publication year: 2014
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