Journal of Regulatory Economics

, Volume 23, Issue 1, pp 5–25 | Cite as

Self-Regulation, Innovation, and the Financial Industry

  • Christodoulos Stefanadis


The paper shows that the presence of continuous innovation may be one of the driving forces of self-regulation. In an infinitely repeated game, there exists a class of subgame perfect equilibria in which the self-regulatory organization, or SRO, pursues socially desirable objectives along the equilibrium path to stave off government intervention. Delegating regulatory authority to the SRO eliminates certification-related delays in the adoption of new services, fosters innovation and leads to higher social welfare.


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Copyright information

© Kluwer Academic Publishers 2003

Authors and Affiliations

  • Christodoulos Stefanadis
    • 1
  1. 1.Payment Studies, Research DepartmentFederal Reserve Bank of New YorkNew York

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