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In Praise Of Ex Ante Regulation, Brian Galle

Georgetown Law Faculty Publications and Other Works

Timing is an important consideration in regulatory design. Corrective taxes are usually imposed before or contemporaneously with the harmful activity they are aimed at preventing, while tort awards are assessed ex post, in its aftermath. Patents and research grants both can encourage innovation, but patents pay off only after the invention is marketed. In a world of perfect information, fully rational actors, and complete credit or insurance markets, time would not matter. In the real world, though, the failure of one or more of these assumptions can change dramatically the impact of a regulatory option. For example, prior commentators have …