Bureaucratic Minimal Squawk Behavior: Theory and Evidence from Regulatory Agencies

Clare Leaver

American Economic Review, 2009, vol. 99, issue 3, 572-607

Abstract: This paper develops a model in which a desire to avoid criticism prompts otherwise public-spirited bureaucrats to behave inefficiently. Decisions are taken to keep interest groups quiet and to keep mistakes out of the public eye. The policy implications of this "minimal squawk" behavior are at odds with the view that agencies should be structured to minimize the threat of "capture." An empirical test using data from US State Public Utility Commissions rejects the capture hypothesis and is consistent with the squawk hypothesis: longer PUC terms of office are associated with a higher incidence of rate reviews and lower household electricity bills. (JEL D73, L51, L97, L98)

JEL-codes: D73 L51 L97 L98 (search for similar items in EconPapers)
Date: 2009
Note: DOI: 10.1257/aer.99.3.572
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Citations: View citations in EconPapers (85)

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