Government & Markets

What are the conditions that distinguish success from failure in the governance and regulation of the economy?

Recent institutional failures, perhaps most notably the financial crisis of 2008, support the growing consensus that economic governance is both imperfect and necessary. However, contemporary scholarship has not thoroughly investigated the range of potential strategies for constructive governance of the economy. There is a real danger that new reforms, developed in response to recent crises, will rely on old models that are outdated or inadequate. Much of the challenging but important work of re-imagining the possibilities and pitfalls of regulation remains to be done. 

To address this challenge, the Tobin Project’s Government & Markets research initiative is focused on identifying the conditions that distinguish government success from government failure. This inquiry aims to understand when and how government regulation contributes to society and which regulatory approaches are prone to failure, with the ultimate goal of designing and implementing better regulation. This research effort has the potential to inform regulatory policymaking on a range of critical issues, and we hope to continue building knowledge that facilitates the development of a vibrant market economy that serves the public interest.

Questions within the initiative include:

Preventing Capture: How can regulation be optimized to serve the public good without falling prey to “capture” by special interests? 

Media and Democracy: How and under what conditions does the press succeed in actively reporting information in the public interest, even in the face of strong countervailing economic and political pressures?

Past research questions have included:

Behavioral and Institutional Regulation: What can new perspectives from both experiments and close observation add to our understanding of how institutions – especially firms and regulators – operate in complex markets to make them work better?

Rethinking Regulation: How might a widespread reconsideration of regulation affect reforms in the field, considering that healthy capitalist societies depend on sensible regulation?