Have you ever wondered why while trying to regulate a sector, positive intent do not always translate into positive outcomes? In fact, most regulatory actions emanating out of bureaucratic directives often lead to negative results, i.e they are bad for the interests of the very stakeholders for which they are intended to benefit. The reason is simple. Bureaucratic action (if not properly thought through) cannot allocate “scarce resources” efficiently. Also, such directives, often end up triggering the “wrong incentives” – promoting inefficient use of “scarce resources”. In order to substantiate the above conclusion, I will like to point to some examples. You will see that in each of these cases the regulatory directives didn’t serve the intended purpose to benefit the stakeholders.
Holding Auctions Where Bidders Pay in Installments
Intent : a) To encourage a large number of players to participate. b) To enhance “demand”, to maximize revenues. b) To mitigate financial burden of the winners.
