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Investment in QualityBOX 9.3Ten Conflicting Priorities in Designing Regulatory Policy1. Short term versus longer-term objectives.2. Efficiency versus equity objectives.3. Competition versus monopoly4. Slow versus fast liberalisation.5. Public versus private ownership.6. Sector specific regulation versus generalcompetition rules.7. Rules versus discretion.8. Permanent versus temporary regulation.9. Centralised versus de-centralised regulation.10. Light-handed versus heavy handed regulation.Source: Bergman et al 1998.Conflicting priorities 1-2 relate to society’s preferences, 3-5 relateto market structures and 6-10 relate to regulatory structure orinstitutions. In many regards a subset of these, and in particular1,2,7,9 &10, are also apt in respect of regulation more generally andin the spatial dimension in particular.Institutions include not only public bodies but also established law,custom and practice. They are supported by a complex web of rules,norms, expectations and sanctions and correspondingly have greatinertia and evolve in an incremental and path dependent way.Williamson (1985) argues that transaction cost economics is theappropriate framework to explain why different institutions evolveto handle different kinds of transaction. He views three ingredientsas being key. The first is ‘bounded rationality’, or the cost ofacquiring and processing information. The second is the role foropportunism, also known as moral hazard. The third is ‘assetspecificity’, or the extent to which the original value of assets is520