How can markets regulate themselves

In comparison with the Berlin stock exchange, the researchers found that over the same period of time there were substantially more initial public offerings on the London markets, covering a far broader range of industries. On the other hand, stocks traded over the counter in London proved to be an extremely risky venture for investors.

Taken on its own, the official market at the London Stock Exchange was not far behind with failure rates of three to four percent.

Measured by their development over an extended period, London stocks actually performed better than their Berlin counterparts, since the average returns in London were higher than in Berlin -- that is when one considers that in the faster growing German economy, share prices generally climbed more steeply. In Berlin, on the other hand, prices were more stable.

However, measures designed to provide investor security would appear in the long term to be bad for business. Similarly, the development in officially quoted securities on the London stock exchange has shown that markets are well able to control themselves, the researchers believe. Please do not edit the piece, ensure that you attribute the author and mention that this article was originally published on FEE.

Latest Stories. Free Markets Are Regulated The myth of disorder. Steven Horwitz. Order without Design This is all correct, of course, but it misses an opportunity to emphasize even more strongly the idea that markets produce order without design. While cutting red tape — i. Regulation can help provide high quality goods and services that people can trust. It matters, however, who or what is doing the regulating.

Contrary to popular belief, governments do not have a monopoly on the provision of regulation. In fact, both the government and market forces regulate goods and services, but one of them regulates better. And it isn't always the bureaucratic army employed by federal, state and local governments. Consider the regulation of taxicabs and other ride-hailing services. In many cities, taxis are regulated by public service commissions PSCs. Instead of allowing the popular new ride-hailing services Uber and Lyft to operate, and thereby giving the public the benefit of innovation and competition, some PSCs have imposed restrictions on the new organizations that protect established taxi businesses from competition.

With these "regulations," some cities have even banned Uber and Lyft altogether, or have made it impossible for Uber and Lyft to operate. Regulations in Austin, Texas, forced Uber to leave the city, creating a void in the ride-hailing industry.

In yet another example of the "law of unintended consequences," this void led to the development of a black market where individuals could connect via Facebook or Craigslist to arrange ride-sharing services. Share Twit Share Email.

August 17, Explore further. Going Public in London and Berlin, Link: www. Provided by Max-Planck-Gesellschaft. This document is subject to copyright. Apart from any fair dealing for the purpose of private study or research, no part may be reproduced without the written permission. The content is provided for information purposes only.

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