Research for Governmental Regulations

Gaming is a tool that the military has used with great success to gain insights into the feasibility of alternative strategies or tactics before actually putting one into practice. Although gaming does not provide real answers, it can provide insights into strategic 'what if' questions. The validity of the insights gained is largely a function of the reality designed into the game and the willingness of the players to immerse themselves in the play. The Advanced Research Projects Agency (ARPA) asked CNA to design a game based on a business sector undergoing change in response to the defense drawdown. The shipbuilding industry was chosen because (1) it is a critical business sector for U.S. economic and military security, (2) it is facing major near-term strategic and tactical decisions that will define its future, and (3) it could be gamed with a high degree of realism. The purpose of the game was to bring together important leaders from government and industry to exchange information and gain insights. Specifically, we wanted to help industry and government leaders answer the following questions: (a) How can the U.S. shipbuilding industry compete in the global market? and (b) What technologies enhance or promote U.S. competitiveness in this market? The game was designed with these objectives in mind. This research memorandum describes the game design and the game play, and provides a summary of the panel discussions, the shipyard play, and the lessons learned.

The rate of productivity growth in the U.S. economy and the extent and effects of government regulation have been matters of great concern in recent years. This study is an empirical investigation of the effect of regulation on productivity in the auto and steel industries during the period 1958-1980. The first step in the study was to develop numerical measures of regulation. These measures were then employed in two empirical models. In the single-equation model, the level or rate of growth of productivity was estimated as a function of output, technology, regulation, and other variables. In the multiequation model, cost and input cost shares were jointly estimated as a function of input prices, output, technology, and regulation. The estimated effect of regulation on productivity varied, depending on the model and the measure of regulation used. For example, the multiequation model indicated a positive effect of regulation on productivity in the steel industry. For the auto industry, however, it indicated that regulation generally had the expected negative effect on productivity. Over the period 1973-1980, regulation was estimated to have lowered the annual rate of productivity growth in the auto industry by 0.55 to 2.00 percentage points, depending on the measures of output and regulation. For Additional Information See 02 052701 00.

This research contribution considers the question of whether or not government should interfere in the practice of skilled professions, and, if interference is called for, the form that it should take. The question arises, because some professions involve the delivery of services so complex, and require so much specialized knowledge, that buyers are generally unable to judge the qualifications of the practitioner or the quality of the services rendered. An examination of the licensing of one profession--dentistry--and measurement of the extent to which licensing improves the quality of care is provided.

This paper takes a metaphysical look at the 'working' of regulation.