Skip to main content

The Public Interest Theory of Regulation: Non-Existence or Misinterpretation?

European Journal of Law and Economics volume 15, pages 165–194 (2003)Cite this article

Abstract

The Public Interest Theory of regulation explains, in general terms, that regulation seeks the protection and benefit of the public at large. This paper argues that possibly the Public Interest Theory does not exist as such for reasons that will be discussed later. In addition, the paper contends that the Stigler's and Posner's characterisation of the Public Interest Theory has similarities with the welfare economics rationale for regulation. Nevertheless, the similarities do not prove or deny a connection between both the concepts of public interest and the welfare economics rationale for regulation.

This is a preview of subscription content, access via your institution.

Access options

Buy single article

Instant access to the full article PDF.

USD 39.95

Price excludes VAT (USA)
Tax calculation will be finalised during checkout.

References Case law

  • Aiton v. Stephen, 3 R (HL) 4 (1876).

  • Allnutt v. Inglis, 12 East 530 (1810).

  • Brass v North Dakota ex rel. Stoeser, 153 US 391 (1894).

  • Budd v New York, 143 U. S. 517 (1892).

  • Chas Wolf Packing Co. v. Court of Industrial Relations, 262 U. S. 522 (1923).

  • Corporation of Stamford v. Pawlett, 1 C. & J. 57, 400 (1930).

  • Council of Civil Service Unions v. Minister for the Civil Service, A. C. 374 (1985).

  • Duncan v. Cammell Laird & Co, A. C. 624 (1942).

  • Ellis v. Home Office, 2 Q. B. 135 (1953).

  • German Alliance Insurance Co. v. Kansas, 233 U. S. 389 (1914).

  • Harris v. Packwood, 3 Taunt. 263 (1810).

  • Hodel v. Indiana, 452 U. S. 314 (1981).

  • Iveagh v. Martin and Another, 1 Lloyd's Rep. 692 QDB (1960).

  • Lochner v. New York, 198 U. S. 45 (1905).

  • Magistrates of Kircaldy v. Greig, 8 D 1247–1248 (1846).

  • Minister of Justice for the Dominion of Canada v. City of Levis, A. C. 505 (PC) (1919).

  • Munn v. Illinois, 94 U. S. 113 (1876).

  • Nebbia v. New York, 291 U. S. 502 (1934).

  • New State Ice Co. v. Liebmann, 285 U. S. 262 (1932).

  • R. v. Bow Street Stipendiary Magistrate, ex parte Pinochet Ugarte, 2 W. L. R. 827 (1999).

  • R. v. Bedfordshire, 24 L. J. Q. B. 84.

  • Ribnik v. McBride, 277 U. S. 350 (1928).

  • Schechter v. United States, 295 U. S. 495 (1935).

  • Tyson and Brother v. Banton, 273 U. S. 418 (1927).

  • Wabash v. Illinois, 118 U. S. 557 (1886). General

  • Anderson, G. & Tollison, R. (1991). Congressional Influence and Patterns of New Deal Expending.Ñ Journal of Law & Economics. 34, 161–175.

    Google Scholar 

  • Aranson, P. (1990). Theories of Economic Regulation: From Clarity to Confusion.Ñ Journal of Law & Politics. 6, 247–286.

    Google Scholar 

  • Bailey, T., Kennedy, D., & Cohen, L. (1998). The American Pageant: A History of the Republic, 11th edn., Boston: Houghton Mifflin.

    Google Scholar 

  • Bannock, Baxter, & Davis. (1998). The Penguin Dictionary of Economics.Ñ Available at <http://www. xrefer. com/entry. jsp? xrefid=445136&secid=.->, accessed 01 August 2001.

  • Barr, N. (1998). The Economics of the Welfare State, 3rd edn., Oxford: Oxford University Press.

    Google Scholar 

  • Bator, F. (1958). The Anatomy of Market Failure.Ñ Quarterly Journal of Economics. 72, 351–379.

    Google Scholar 

  • Becker, G. (1983). A Theory of Competition among Pressure Groups for Political Influence.Ñ Quarterly Journal of Economics. 98(3), 371–400.

    Google Scholar 

  • Becker, G. (1986). The Public Interest Hypothesis Revisited: A New Test of Peltzman's Theory of Regulation.Ñ Public Choice. 49, 223–234.

    Google Scholar 

  • Benedict, M. (1998). Law and Regulation in the Gilded Age and Progressive Era.Ñ Available at <http://www2.h-net.msu.edu/?shgape/pres98.html>, accessed 19 December 2000.

  • Bernstein, M. (1955). Regulating Business by Independent Commission, Princeton, NJ: Princeton University Press.

    Google Scholar 

  • Biles, R. (1994). The South and the New Deal, Lexington: University Press of Kentucky.

    Google Scholar 

  • Black, J. (1997). Oxford Dictionary of Economics,,Oxford: Oxford University Press.

    Google Scholar 

  • Blaug, M. (1992). The Methodology of Economics: or How Economists Explain, Cambridge Surveys of Economic Literature, 2nd edn., Cambridge: Cambridge University Press.

    Google Scholar 

  • Brandeis, L. (1914). Business-A Profession, Boston: Small, Maynard.

    Google Scholar 

  • Couch, J. & Shughart, W. (1998). The Political Economy of the New Deal, Cheltenham: Edward Elgar.

    Google Scholar 

  • Craig, P. (1991). ‘Constitutions, Property and Regulation.’ Public Law. 538–554.

  • Cushman, R. (1941). The Independent Regulatory Commissions, New York: Oxford University Press.

    Google Scholar 

  • Davidson et al. (1997). Nation of Nations: A Narrative History of the American Republic 3/e.Ñ Available at <http://www.mhhe.com/socscience/history/usa/david/olc/269.htm>, accessed 04 July 2001.

  • DeLong, J. (1997). Slouching Towards Utopia? The Economic History of the Twentieth Century. XIV. The Great Crash and the Great Slump.Ñ <http://econ161.berkeley.edu/TCEH/Slouch Crash14.html>, accessed 27 December 2000.

  • Den Hertog, J. (2000). "General Theories of Regulation.Ñ In B. Bouckaert & G. de Geest (eds.), Encyclopedia of Law and Economics: Volume III. The Regulation of Contracts, Cheltenham, UK, Edward Elgar.

    Google Scholar 

  • DiLorenzo, T. (1985). The Origins of Antitrust: An Interest-Group Perspective.Ñ International Review of Law and Economics. 5, 73–90.

    Google Scholar 

  • Dunleavy, P. & O'Leary, B. (1987). Theories of the State: The Politics of Liberal Democracy, Basingstoke: Macmillan.

    Google Scholar 

  • Eisner, M. (1993). Regulatory Politics in Transition, Baltimore: Johns Hopkins University Press.

    Google Scholar 

  • Ekelund, R., McDonald, M., & Tollison, R. (1995). "Business Restraints and the Clayton Act of 1914: Publicor Private-Interest Legislation?Ñ In F. McChesney & W. Shughart (eds.), The Causes and Consequences of Antitrust: The Public Choice Perspective, Chicago, The Chicago University Press.

    Google Scholar 

  • Fainsod, M. (1940). Some Reflections on the Nature of the Regulatory Process.Ñ In C. Friedrich & F. Mason (eds.), Public Policy, Cambridge: MA, Harvard University Press.

    Google Scholar 

  • Fainsod, M. & Gordon, L. (1941). Government and the American Economy, New York: Norton.

    Google Scholar 

  • Foster, C. (1992). Privatization, Public Ownership and the Regulation of Natural Monopoly, Oxford: Blackwell.

    Google Scholar 

  • Friedman, D. (1987). "Just Price.Ñ In J. Eatwell, M. Milgate, & P. Newman (eds.), The New Palgrave Dictionary of Economics, 1st edn., Vol. 2, London, The Macmillan Press Limited, pp. 1043–1044.

  • Gilligan, G. (1997). The Origins of UK Financial Services Regulation.Ñ Company Lawyer. 18(6), 167–176.

    Google Scholar 

  • Gilligan, T., Marshal, W., & Weingast, B. (1989). Regulation and the Theory of Legislative Choice: The Interstate Commerce Commission Act of 1887.Ñ Journal of Law & Economics. 32, 35–62.

    Google Scholar 

  • Graham, O. (1967). An Encore for Reforms: The Old Progressives and the New Deal, 1st edn., London: Oxford University Press.

    Google Scholar 

  • Hale, M. (Sir) (1787). A Treatise, in Three Parts. Pars Prima, De jure maris et brachiorum ejusdem. Pars Secunda, De portibus maris. Pars Tertia, Concerning the custom of goods imported and exported. Considerations touching the amendment or alteration of laws. A discourse concerning the Courts of King's Bench and Common Pleas.Ñ In A. Hargrave, Collection of Tracts, Vol. I.

  • Hamouda, O. & Price, B. (1997). The Justice of the Just Price.Ñ The European Journal of Economic Thought. 4(2), 191–216.

    Google Scholar 

  • Hartman, D. (n.d.). Order of the Patrons of Husbandry—The Grange. Available at <http://www.connerprairie.org/historyonline/grange.html>, accessed 08 August 2002.

  • Heering, P. (1936). Public Administration and the Public Interest. New York: McGraw-Hill.

    Google Scholar 

  • Heilbroner, R. & Singer, A. (1994). The Economic Transformation of America since 1865, Fort Worth: Harcourt Brace.

    Google Scholar 

  • Held, V. (1970). The Public Interest and Individual Interest. New York: Basic Books.

    Google Scholar 

  • Holdsworth, W. (Sir) (1936 Vol. II; 1937 Vol. IV; 1938 Vol. XI; 1971 Vol. VI). A History of English Law, London, Methuen & CO. Ltd.

    Google Scholar 

  • Jones, D. (1988). Regulatory Concepts, Propositions, and Doctrines: Casualties and Survivors.Ñ Journal of Economic Issues. 22(4), 108–190.

    Google Scholar 

  • Joskow, P. & Noll, R. (1981). Regulation in Theory and Practice: An Overview.Ñ In G. Fromm (ed.), Studies in Public Regulation, MIT Press Series on the Regulation of Economic Activity, Cambridge, MA, The MIT Press.

    Google Scholar 

  • Kens, P. (1998). Lochner V. New York: Economic Regulation on Trial, University Press of Kansas.

  • Kesler, C. (1989). The Public Philosophy of the New Freedom and the New Deal.Ñ In R. Eden (ed.), The New Deal and Its Legacy: Critique and Reappraisal, New York: Greenwood Press.

    Google Scholar 

  • Killian & Costello, A. (1996). The Development of Substantive Due Process, The Constitution of the United States of America: Analysis and Interpretation Annotations of Cases Decided by the Supreme Court of the United States to June 29, 1992.Ñ Washington, U. S. Government Printing Office. Available at <http://caselaw.lp.findlaw.com/data/constitution/amendment14/03.html#2>, accessed 30 August 2002.

    Google Scholar 

  • Kolko, G. (1963/1967). The Triumph of Conservatism, 1st edn., Chicago: The Free Press of Glencoe. Quadrangle Books.

    Google Scholar 

  • Koning, N. & Jongeneel, R. (1997). Neo-Paretian Welfare Economics: Misconceptions and Abuses, (Issue 05-97). Available at <http://www.wau.nl/wub/wep/nr9705/wep05.htm>, accessed 27 July 2001.

  • Landis, J. (1938). The Administrative Process, New Haven: Yale University Press.

    Google Scholar 

  • Leiserson, A. (1942). Administrative Regulation: A Study in Representation of Interests. Chicago: University of Chicago Press.

    Google Scholar 

  • Letwin, W. (1965). Law and Economic Policy in America:The Evolution of the Sherman Antitrust Act, New York: Random House.

    Google Scholar 

  • Lovewell, M. (2000). One for Another: Thomas Aquinas and the Just Price.Ñ Understanding Economics: A Contemporary Perspective. Available at <http://www.ryerson.ca/?lovewell/aquinas.html>, accessed 07 August 2002.

  • McChesney, F. (1995). Be True to your School: Chicago's Contradictory Views of Antitrust and Regulation.Ñ In F. McChesney & W. Shughart (eds.), The Causes and Consequences of Antitrust: The Public Choice Perspective, Chicago, The Chicago University Press.

    Google Scholar 

  • McCraw, T. (1975). Regulation in America: A Review Article.Ñ Business History Review. 49(2), 159–183.

    Google Scholar 

  • Mishan, E. (1981). Introduction to Normative Economics, New York: Oxford University Press.

    Google Scholar 

  • Mitnick, B. (1980). The Political Economy of Regulation. Creating, Designing, and Removing Regulatory Forms,,New York: Columbia University Press.

    Google Scholar 

  • Ogus, A. (1994). Regulation: Legal Form and Economic Theory, Oxford: Clarendon Press.

    Google Scholar 

  • Oliver, D. (1987). Is the Ultra Vires Rule the Basis of Judicial Review?Ñ Public Law. 543–545.

  • Patterson, J. (1969). The New Deal and the States, Princeton, NJ: Princeton University Press.

    Google Scholar 

  • Peltzman, S. (1976). Towards a More General Theory of Regulation.Ñ Journal of Law and Economics. 19, 211–240.

    Google Scholar 

  • Peritz, R. (1996). Competition Policy in America, 1888–1992: History, Rhetoric, Law, New York: Oxford University Press.

    Google Scholar 

  • Porter, K. & Johnson, D. (1961/1956). National Party Platforms, 1849–1960, 2nd edn., Urbana: University of Illinois Press.

    Google Scholar 

  • Posner, R. (1971). Taxation by Regulation.Ñ Bell Journal of Economics and Management Science. 2(1), 22–50.

    Google Scholar 

  • Posner, R. (1974). Theories of Economic Regulation.Ñ Bell Journal of Economics and Management Science. 5(2), 335–358.

    Google Scholar 

  • Priest, G. (1993). The Origins of Utility Regulation and the ‘Theories of Regulation’ Debate.Ñ Journal of Law and Economics. 36(1), 289–323.

    Google Scholar 

  • Prosser, T. (1997). Law and the Regulators, Oxford: Clarendon Press.

    Google Scholar 

  • Roosevelt, T. (1910). The New Nationalism: From a speech given in 1910.Ñ Available at <http://www.nv.cc.va.us/home/nvsageh/Hist122/Part2/TRNewN1910.htm>, accessed 04 July 2001.

  • Roosevelt, T. (1961). The New Nationalism, Englewood Cliffs, N. J: Prentice Hall, (originally published in 1910).

    Google Scholar 

  • Schubert, G. (1960). The Public Interest. A Critique of the Theory of Political Concept, Illinois: The Free Press of Glencoe.

    Google Scholar 

  • Skuse, A. (1972). Government Intervention and Industrial Policy.Ñ In Studies in the British Economy, 2nd edn., London: Heinemann Educational Books Ltd.

    Google Scholar 

  • Stigler, G. (1971). The Theory of Economic Regulation.Ñ Bell Journal of Economics and Management Science. 2(1), 3–21.

    Google Scholar 

  • Stigler, G. (1985). The Origin of the Sherman Act.Ñ Journal of Legal Studies. 14, 1–12.

    Google Scholar 

  • Stigler, G. & Friedland, C. (1962). What Can Regulators Regulate? The Case of Electricity.Ñ Journal of Law and Economics. 5, 1–19.

    Google Scholar 

  • Taylor, J. (2002). The National Industrial Recovery Act of 1933 and the Compliance Crisis of 1934, (Working Paper), The University of Virginia.

  • The Columbia Encyclopedia. (2001). 3th edn., Columbia University Press. Available at <http://www.bartleby.com/65>, accessed 07 August 2002.

  • Tirole, J. (1997/1988). The Theory of Industrial Organization, 11th printing, Cambridge, MA: The MIT Press.

    Google Scholar 

  • Viscusi, K., Vernon, J., & Harrington Jr., J. (1995). Economics of Regulation and Antitrust, 2nd edn., Cambridge, MA: The MIT Press.

    Google Scholar 

  • Waddams Price, C. (1977). Welfare Economics in Theory and Practice, London: The Macmillan Press Ltd.

    Google Scholar 

  • Wallis, J. (1987). Employment, Politics, and Recovery during the Great Depression.Ñ Review of Economics and Statistics. 49, 516–520.

    Google Scholar 

  • Wettergreen, J. (1989). The Regulatory Policy of the New Deal.Ñ In R. Eden (ed.), The New Deal and Its Legacy: Critique and Reappraisal, New York, Greenwood Press.

    Google Scholar 

  • Wilks, S. (1999). In the Public Interest: Competition Policy and the Monopolies and Mergers Commission, Manchester: Manchester University Press.

    Google Scholar 

  • Wilson, W. (1913). The New Freedom. A Call for the Emancipation of the Generous Energies of a People.Ñ Available at <http://1912.history.ohio-state.edu/1912Documents/EmancipationofBusiness.htm>, accessed 08 August 2002.

  • Woolf of Barnes (Lord) (1995). Droit Public-English Style.Ñ Public Law. 57.

Download references

Author information

Authors and Affiliations

  1. Centre for Competition and Regulation, University of East Anglia, Norwich, Norfolk, NR4 7TJ, UK

    Michael Hantke-Domas

Authors
  1. Michael Hantke-Domas
    View author publications

    You can also search for this author in PubMed Google Scholar

Rights and permissions

Reprints and Permissions

About this article

Cite this article

Hantke-Domas, M. The Public Interest Theory of Regulation: Non-Existence or Misinterpretation?. European Journal of Law and Economics 15, 165–194 (2003). https://doi.org/10.1023/A:1021814416688

Download citation

  • Issue Date:

  • DOI: https://doi.org/10.1023/A:1021814416688

  • theories of regulation
  • public interest
  • history of microeconomics
  • welfare economics
  • law and economics of regulated industries
  • regulation