[thisosound]

Regulation is a public good, therefore it is itself a market failure. Voters don't do hours of research to determine what constitutes rational regulation.

So, if there's a new law that will cost 990 people $1 each and the other 10 people gain 99 each... it will pass, because for 99% of the people it's not even worth an hour of their time to rally against it. However, the 1% that benefit from it can afford to organize entire campaigns to convince the 99% that this new law is for their own good.

[mikeash]

It certainly can be. Lots of laws are built to favor small groups who benefit less than the total cost imposed on the rest of the country.

My point is simply that regulation can be overall good and that you can't detect this by having them compete, because even good regulation can't compete.