Chapter

The Trilateral Dilemma in Financial Regulation

Edited by Howell E. Jackson

in Overcoming the Saving Slump

Published by University of Chicago Press

Published in print March 2009 | ISBN: 9780226497099
Published online February 2013 | e-ISBN: 9780226497105 | DOI: http://dx.doi.org/10.7208/chicago/9780226497105.003.0004
The Trilateral Dilemma in Financial Regulation

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This chapter deals with a dozen examples of trilateral dilemmas in financial regulation, and elbaorates the legal aspects of financial education and advice. Trilateral dilemmas appear in multiple areas of the financial services industry and have generated a surprisingly diverse array of regulatory responses. Defenders of side payments typically assert a general defense, resting on the notion that competitive forces will ensure that the payments are offset in the total prices individuals pay for their financial services and then on more context-specific claims that these payments address some more subtle contracting problems. While blended pricing may in some contexts facilitate price comparison and market constraints on abuses, at other times, the blending of costs may complicate such comparison and insulate firms from market pressures. Finally, a few remarks on the implications of the analysis for consumer education are provided.

Keywords: financial regulation; trilateral dilemmas; financial education; financial advice; financial services industry; consumer education; market

Chapter.  12516 words.  Illustrated.

Subjects: Public Economics

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