glyph 54: james c bennett jim upi column regulatory arbitrage internet taxes taxation economic efficiency transaction costs governance services . government . civic state . economic state . network commonwealth, anglosphere ... James Watt, the Pope, University of Glasgow, Guild of Hammermen ... steam engines


Regulatory Arbitrage, UPI Column, 18 August 2002, by James C. Bennett

The internet lowers the transaction costs for some kinds of regulatory arbitrage

James C. Bennett's UPI column for 18 August 2002 explains regulatory arbitrage, a concept and practice of importance to explorers of all kinds, directly or by implication. Providers of governance services compete for our business. There are reasons why offers of better service at lower cost may appear in the future.

"Arbitrage is the economic practice of taking advantage of a difference in price of the same good or service in two different places. An arbitrageur buys in the cheap place and sells in the expensive place. The game is to see whether the transaction costs of buying and selling can be kept low enough to make a profit from the price difference.

"Regulatory arbitrage is a subset of this practice. In particular, it looks to take advantage of places that are more economically efficient (and thus produce better and/or cheaper goods and services than overregulated places) and make their goods and services available in less efficient places.

"The Internet obviously lowers the transaction costs of this kind of regulatory arbitrage, and, if it can be organized properly, will make much more of this posssible in the future."

The article is no longer available on the UPI website - March 4, 2007.

An interesting example of regulatory arbitrage is given by Andrew Carnegie in his biography of James Watt. See — How a Pope Contributed to the Development of the Steam Engine.
entered before July 9, 2006; edited/updated November 26, 2015

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