Politically induced regulatory risk and independent regulatory agencies

Roland Strausz

International Journal of Industrial Organization, 2017, vol. 54, issue C, 215-238

Abstract: Uncertainty in election outcomes generates politically induced regulatory risk. For monopoly regulation, political parties’ risk attitudes towards such risk depend on a fluctuation effect that hurts both parties and an output–expansion effect that benefits at least one party. Irrespective of the parties’ risk attitudes, political parties have incentives to negotiate away regulatory risk by pre-electoral bargaining. Pareto-efficient bargaining outcomes fully eliminate regulatory risk and are attainable through institutionalizing independent regulatory agencies with a specific objective. Key aspects of the regulatory overhaul of the US Postal system in 1970 are argued to be consistent with these results.

Keywords: Regulation; Independent regulatory agency; Regulatory risk; Electoral uncertainty (search for similar items in EconPapers)
JEL-codes: D82 (search for similar items in EconPapers)
Date: 2017
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S0167718717302102
Full text for ScienceDirect subscribers only

Related works:
Working Paper: Politically Induced Regulatory Risk and Independent Regulatory Agencies (2017)
Working Paper: Politically Induced Regulatory Risk and Independent Regulatory Agencies (2015)
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:eee:indorg:v:54:y:2017:i:c:p:215-238

DOI: 10.1016/j.ijindorg.2017.07.003

Access Statistics for this article

International Journal of Industrial Organization is currently edited by P. Bajari, B. Caillaud and N. Gandal

More articles in International Journal of Industrial Organization from Elsevier
Bibliographic data for series maintained by Catherine Liu ().