How do federal regulations affect consumer prices? An analysis of the regressive effects of regulation

Dustin Chambers (), Courtney A. Collins and Alan Krause
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Dustin Chambers: Salisbury University
Courtney A. Collins: Rhodes College

Public Choice, 2019, vol. 180, issue 1, No 5, 57-90

Abstract: Abstract This study is the first to measure the impact of federal regulations on consumer prices. By combining consumer expenditure and pricing data from the Bureau of Labor Statistics, industry supply-chain data from the Bureau of Economic Analysis, and industry-specific regulation information from the Mercatus Center’s RegData database, we determine that regulations promote higher consumer prices, and that these price increases have a disproportionately negative effect on low-income households. Specifically, we find that the poorest households spend larger proportions of their incomes on heavily regulated goods and services prone to sharp price increases. While the literature explores other specific costs of regulation, noting that higher consumer prices are a probable consequence of heavy regulation, this study is the first to provide a thorough empirical analysis of that relationship across industries. Irrespective of the reasons for imposing new regulations, these results demonstrate that in the aggregate, the negative consequences are significant, especially for the most vulnerable households.

Keywords: Regulation; Federal regulations; Regressive effects; Distributional effects; Consumer prices; Consumer Expenditure Survey; RegData (search for similar items in EconPapers)
JEL-codes: D12 H23 I18 L51 (search for similar items in EconPapers)
Date: 2019
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (17)

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DOI: 10.1007/s11127-017-0479-z

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