Electoral interests and price fluctuation in regulated markets

Claudio A. C. Paiva ()

Brazilian Journal of Political Economy, 1994, vol. 14, issue 4, 537-547

Abstract: This paper builds on the theory of regulation developed by Stigler and Peltzman.According to these authors, a regulator chooses his/her strategy seeking to maximize politicalsupport from consumers and producers, viewing welfare and efficiency as secondary issues.This process determines a regulated price that is between the competitive and monopolisticlevels. Our paper develops a modified version of Peltzman’s model by considering the ideathat the regulator’s behaviour might change with the proximity of elections. The additionof a timing dimension to the problem and its implication for consumers, producers and theregulator’s behavior suggest that the optimal strategy now implies in a price cycle in regulatedindustries. The regulator has incentives to impose higher prices when elections are relativelyfar ahead and lower (real) prices in periods that immediately precede an important election.We show that the Brazilian gasoline market between 1969-1984 supports our results. JEL Classification: E31; D72; L71.

Keywords: Political economy; political business cycle; election; inflation; fuel (search for similar items in EconPapers)
Date: 1994
References: Add references at CitEc
Citations:

Downloads: (external link)
https://centrodeeconomiapolitica.org.br/repojs/ind ... ticle/view/1301/1286 (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: https://EconPapers.repec.org/RePEc:ekm:repojs:v:14:y:1994:i:4:p:537-547:id:1301

Access Statistics for this article

More articles in Brazilian Journal of Political Economy from Center of Political Economy
Bibliographic data for series maintained by Brazilian Journal of Political Economy (Brazil) ().