The Appropriate Division of Regulatory Labor

Abstract

Should national postal authorities or postal operators, experts in postal economics and policy, also become experts in estimating environmental costs and benefits? The alternative view is that there should be a “division of regulatory labor,” akin to the division of productive labor going back to Adam Smith. An environmental regulator can incorporate pollution and global warming costs across the economy, while postal authorities address postal policy goals taking the costs determined by environmental policy into account. A potential boundary between postal and environmental policy is pertinent also to national or transnational regulation of electric transmission and distribution grids. This issue has recently arisen in antitrust, as policymakers express greater sympathy for considerations beyond consumer benefit, including social equality and environmental sustainability. Employment and equity are arguably (and controversially) separable as well. However, there may be limits to the division of regulatory labor. Competition authorities in the USA have not been reluctant to expect other regulators in the USA to incorporate competitive effects in designing their regulations. Moreover, often sectoral regulators are expected to balance multiple policy considerations. One also needs to recognize that other regulations, such as climate-related carbon pricing, may not be in place.