The Politics of Government Decision-Making: A Theory of Regulatory Capture

Jean-Jacques Laffont and Jean Tirole

The Quarterly Journal of Economics, 1991, vol. 106, issue 4, 1089-1127

Abstract: The paper develops an agency-theoretic approach to interest-group politics and shows the following: (1) the organizational response to the possibility of regulatory agency politics is to reduce the stakes interest groups have in regulation. (2) The threat of producer protection leads to low-powered incentive schemes for regulated firms. (3) Consumer politics may induce uniform pricing by a multiproduct firm. (4) An interest group has more power when its interest lies in inefficient rather than efficient regulation, where inefficiency is measured by the degree of informational asymmetry between the regulated industry and the political principal (Congress).

Date: 1991
References: Add references at CitEc
Citations: View citations in EconPapers (389)

Downloads: (external link)
http://hdl.handle.net/10.2307/2937958 (application/pdf)
Access to full text is restricted to subscribers.

Related works:
Working Paper: The Politics of Government Decision-Making: a Theory of Regulatory Capture (1990)
Working Paper: The Politics of Government Decision-Making: A Theory of Regulatory Capture (1988)
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: https://EconPapers.repec.org/RePEc:oup:qjecon:v:106:y:1991:i:4:p:1089-1127.

Ordering information: This journal article can be ordered from
https://academic.oup.com/journals

Access Statistics for this article

The Quarterly Journal of Economics is currently edited by Robert J. Barro, Lawrence F. Katz, Nathan Nunn, Andrei Shleifer and Stefanie Stantcheva

More articles in The Quarterly Journal of Economics from President and Fellows of Harvard College
Bibliographic data for series maintained by Oxford University Press ().