Basic Cost Benefit Analysis for Assessing Local Public Projects, Second Edition

CHAPTER 8

Cost Benefit Analysis of Proposed New Regulations

There is only one difference between a bad economist and a good one: the bad economist confines himself to the visible effect; the good economist takes into account both the effect that can be seen and those effects that must be foreseen.

—Frederic Bastiat (1801–1850)

Chapter 8 Preview

When you have completed reading this chapter you will:

• be aware of “regulatory capture” and the use and misuse of cost benefit analysis (CBA) in local government regulation;

• consider how the compliance costs of regulation affect price and output;

• differentiate between regulations affecting parties directly involved with a transaction and those associated with third party external effects;

• assess ...