Expected effects of projected institutional changes in digital out-of-home advertising

Abstract

During the political, economic instability and uncertainty, both the goals of economic regulation and the methods of decision-making are changing. Against the backdrop of changes in state policy, the need to ensure national security is becoming more acute, while there are still decision-making risks associated with the rent-seeking behavior of the regulatory authority or some market players. This article considers Draft law no. 160605–8 “On Amendments to the Federal Law “On Advertising” in context of regulating relations in the outdoor advertising, both in terms of the legislative innovation effectsand the compliance of these norms with the criteria for “promising trajectories” of institutional changes. After a resonant discussion in the media, the Draft law was rejected by the State Duma in its second reading, which confirms the importance of public discussions on lawmaking and economic analysis of the proposed measures. With the regulatory impact assessment methodology, we get a qualitative and quantitative estimation of organizational and technical measures of the proposed regulation (namely, the emergence of a private single operator of digital advertising structures). We also offer alternative institutional solutions that allow achieving the proclaimed goal of the draft law with greater efficiency: the introduction of business requirements (licensing, accreditation, maintaining a registry) or implementation of market self-organization. We conclude that granting control functions to one of the market players creates risks associated with an unresolved conflict of interest, which can lead to monopolization of digital out-of-home services and budget losses.