Public choice, ambiguity and regulation

Abstract

When governments make choices on behalf of their citizens fewer private choices can be made. If there were no ambiguity it would be possible for government to plan effectively but as soon as task knowledge changes, uncertainty and ambiguity results, and government must resort to other forms of regulation. Four ideal types of regulation are considered. A contingency model is developed with task ambiguity and industry concentration as the contingency variables. De-regulation and privatization may be seen as an attempt by government to increase private choice. Examination of the British telecommunications and bus transport industries suggests that this comes about to some extent. But two hybrid forms of regulation are also considered in relation to these two cases which permit a greater private choice than pure planning but which also allows government to maintain a degree of overall control.