Capture, Politics and Antitrust Effectiveness

Rocco Ciciretti (), Simone Meraglia () and Gustavo Piga ()
Additional contact information
Simone Meraglia: Toulouse School of Economics

No 208, CEIS Research Paper from Tor Vergata University, CEIS

Abstract: We study the ex-ante budget devoted by a Political Principal to a Competition Authority in charge of collecting evidence on the Industry's behavior. The Industry can capture both the Principal (lobbying) for a reduced budget, and the Authority (side-contracting) so as to avoid fines. Authority's capture is costly to the Principal when side-contracting is sufficiently efficient. Collusion proofness induces high-powered incentives for the Authority, hence fostering the Authority's willingness to spend the allocated budget. For intermediate values of side-contracting's efficiency, in this moral hazard setting we find that the optimal budget increases as side-contracting gets more efficient. Only when side-contracting's efficiency reaches high enough values the budget decreases, thus generating a discrepancy between the Authority's and the Principal's desired level of information gathering. Finally, a complementarity between lobbying of the Principal and capture of the Authority arises.

Keywords: Budget; Law Enforcement; Three-tier Hierarchy; Moral Hazard; Collusion-Proofness; Lobbying. (search for similar items in EconPapers)
JEL-codes: D72 D73 D82 K21 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-com, nep-cta, nep-pol and nep-reg
Date: 2011-07-14, Revised 2013-04-05
References: View references in EconPapers View complete reference list from CitEc
Citations Track citations by RSS feed

Downloads: (external link)
ftp://www.ceistorvergata.it/repec/rpaper/RP208.pdf Main text (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: http://EconPapers.repec.org/RePEc:rtv:ceisrp:208

Ordering information: This working paper can be ordered from
CEIS - Centre for Economic and International Studies - Faculty of Economics - University of Rome "Tor Vergata" - Via Columbia, 2 00133 Roma
http://www.ceistorvergata.it

Access Statistics for this paper

More papers in CEIS Research Paper from Tor Vergata University, CEIS
Address: CEIS - Centre for Economic and International Studies - Faculty of Economics - University of Rome "Tor Vergata" - Via Columbia, 2 00133 Roma
Contact information at EDIRC.
Series data maintained by Barbara Piazzi ().