Keeping Both Eyes Wide Open: The Life of a Competition Authority Among Sectoral Regulators

Steffen H. Hoernig (), Tore Nilssen () and Pedro Barros ()

No 6861, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: Competition authorities must pay attention to many industries simultaneously. Sectoral regulators concentrate on their own industry. Often both types of authority may intervene in specific industries and there is an overlap of jurisdictions. We show how a competition authority’s resource allocation is affected by its relationships with sectoral regulators and their biases. If agencies collaborate (compete), the competition authority spends more effort on the industry with the more (less) consumer-biased sectoral regulator. The competition authority spends budget increases on the industry whose regulator reacts less to more effort. The socially optimal budget corrects for distortions due to regulatory bias, but only downwards.

Keywords: Competition authority; Regulatory bias; Sectoral regulators (search for similar items in EconPapers)
JEL-codes: H11 L40 L51 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-com and nep-reg
Date: Written 2008-06

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