Self-Regulation, Innovation, and the Financial Industry

Christodoulos Stefanadis

Journal of Regulatory Economics, 2003, vol. 23, issue 1, 5-25

Abstract: 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. Copyright 2003 by Kluwer Academic Publishers

Date: 2003
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