Theories of economic regulation modulate between optimism – associated with those who view regulators as benignly pursuing the public interest or other civic-minded goals – and pessimism – most commonly associated with the public choice school, which sees regulators as captured by the powerful private firms they are charged to regulate. These accounts of regulation focus mainly on regulation's substance, rather than the process by which it is enacted and its ability to promote stability in government policy for the operation of markets and the decisions of investors. Yet, whatever account is best in the abstract, regulatory law has failed utterly to examine the evolution of regulation and how it interacts with changes in technology, economic conditions, and political preferences. Examining regulation and regulatory law through the lens of bargaining sheds light on the institutional role courts can play, particularly given the new issues that arise in deregulated, or competitively restructured, markets.

Under the regime of natural monopoly regulation, predominant in the twentieth century, public and private interests converged in ways that were often (to the extent the public interest account of regulation is correct), but certainly not always (as public choice reminds us), welfare enhancing. Natural monopoly regulation, which represents a contract of sorts, was plagued with its own problems; however, it provided a relatively stable legal system for more than 50 years.