Which public interest is important to keep in mind for the establishment of the industry?cgbsc board question class 10th.
Answers
The Public Interest Theory of regulation explains in general terms, that regulation seeks the protection and benefit of the public at large;[1] public interest can be further described as the best possible allocation of scarce resources for individual and collective goods. Regulation means the employment of legal instruments for the implementation of socio-economic policy objectives, for example the government can establish economic and social regulations in order to realize goals like allocative efficiency, stabilization, or fair and just income distribution
In modern economies, the allocation of scarce resources is mainly coordinated by the market. In theory, this allocation of resources is optimal, but these conditions are frequently not complied in practice. The allocation of resources is not optimal and there is need for methods for improving the allocation. One of the methods for achieving efficiency in the allocation of resources is government regulation.[2]
According to public interest theory, government regulation is the instrument for overcoming the disadvantages of imperfect competition, unbalanced market operation, missing markets and undesirable market results. Regulation can improve the allocation by facilitating, maintaining, or imitating market operation. The exchange of goods and production factors in markets assumes the definition, allocation and assertion of individual property rights and freedom to contract.[2]
Public Interest Theory is a part of welfare economics and emphasizes that regulation should maximize social welfare and that regulation is the result of a cost/benefit analysis done to determine if the cost to improve the operation of the market outweighs the amount of increased social welfare.
The following costs can be distinguished in this:
1. The costs of formulating and implementing regulation;
2. The costs of maintaining regulation;
3. The costs of compliance with the rules for industry;
4. The dead weight costs resulting from distortive changes in connection with 1-3.
Public interest theory is developed from classical conceptions of representative democracy and the role of government,[3] and it has considerable confidence in the civil service, according to Max Weber civil servants are office carriers dedicated to carry out the duties that constitute their particular role or task within a strictly ordered and specialized hierarchy. The combination of merit and tenure with unambiguous norms of impartiality support rational decision making based on administrative decision making where individual decisions are attributed to either the subsumption under norms or the balancing of means and ends.
In this conception, regulatory administration neither adds to nor subtracts from the policy decided by lawmakers. The public interest may be served, but it is served exactly as interpreted by lawmakers. Bureaucracy does not usurp the public interest, nor does it protect against its usurpation by particularistic interests seeing regulation as a vehicle for their own concerns.[4] Contrary to the capture theory, it states that the ultimate goal of regulation is to pursue some conception of the general good