To What Extent Do Public Interest and Private Interest Affect Regulations? An Empirical Investigation of Firms in Japan

Fumitoshi Mizutani and Eri Nakamura
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Eri Nakamura: Graduate School of Business Administration, Kobe University

No 2015-21, Discussion Papers from Kobe University, Graduate School of Business Administration

Abstract: Through an empirical analysis of firms in Japan, this paper investigates to what extent the public interest and the private interest theories, respectively, explain the actual regulatory process. Our estimation findings are as follows. First, the explanatory power of the public interest theory is higher in non-public utility industries, while that of the private interest theory is higher in public utility industries. Second, rapidly growing industries become less regulated as they no longer need government protection. Third, highly competitive industries become more regulated so as to retain profit for individual companies. Fourth, price level has different implications among industries. The negative coefficient in non-public utility industries supports the public interest theory, while the positive coefficient in public utility industries supports the private interest theory.

Keywords: Determinants of regulation; Corporate governance; Public interest theory; Private interest theory (search for similar items in EconPapers)
JEL-codes: L44 L51 L52 (search for similar items in EconPapers)
Pages: 20 pages
Date: 2015-06
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