The meaning of regulatory costs

Regulatory costs are an essential aspect of the efficiency and quality of regulations. Moreover, they are a genuine loss of welfare which have a negative impact on national income. Surprisingly, regulatory costs are often neglected or misinterpreted in regulatory assessments, except—though only recently—for administrative compliance costs. One important reason is the lack of a clear and consistent definition as well as a practical and exhaustive typology of regulatory costs. This conceptual paper presents a cost taxonomy that takes into account all costs of regulation. We identify 16 direct and two indirect regulatory cost types. The former are costs borne by society in preparing and implementing regulations. For the government, they consist of information, decision-making, drawing-up, planning, administrative start-up, operational, monitoring, and enforcement costs. Citizens and businesses, on the other hand, incur rent-seeking, information, planning, three types of compliance, delay and enforcement costs. The indirect costs comprise the efficiency loss plus, in the event of poorly designed or market-based regulation, also transaction costs. The neglect of any of these costs may lead to the underestimation of costs in absolute or relative terms and thus to inefficient regulatory choices.     

The Limits of Issue Ownership Dynamics: The Constraining Effect of Party Preference

Issue ownership theory argues that when a voter considers a party to be the most competent amongst others to deal with an issue (that is, the party “owns” the issue), chances are the voter will vote for that party. Recent work has shown that perceptions of issue ownership are dynamic: they are affected by the media coverage of party messages. However, based on the broad literature on partisan bias, we predict that parties' efforts to change issue ownership perceptions will have a difficult time breaching the perceptual screen created by a voter's party preference. Using two separate experiments with a similar design we show that the effect of partisan issue messages on issue competence is moderated by party preference. The effect of issue messages is reinforced when people already like a party, and blocked when people dislike a party.