Regulatory instruments and their effects on investment behavior

Phil Burns and Christoph Riechmann

No 3292, Policy Research Working Paper Series from The World Bank

Abstract: Regulatory instruments have long been understood to have a powerful effect on investment, and part of the motivation for introducing higher-powered regulatory regimes and contracts was to reduce incentives for inefficiency and over-investment (gold plating) inherent in cost-plus regulatory schemes. In practice, the mix of incentives and the institutional framework that make up a higher-powered regulatory regime can also lead to unintended distortions on investment behavior. The authors examine the key drivers of investment behavior and provide some examples of how these drivers have affected investment in practice. They conclude with a set of key areas and interrelationships that are at the core of a regulatory settlement, and therefore need to be designed appropriately to drive efficient investment behavior.

Keywords: Environmental Economics&Policies; International Terrorism&Counterterrorism; Business Environment; Economic Theory&Research; Decentralization; Economic Theory&Research; Environmental Economics&Policies; Business Environment; Business in Development; International Terrorism&Counterterrorism (search for similar items in EconPapers)
Date: 2004-04-01
New Economics Papers: this item is included in nep-fin and nep-reg
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (8)

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