The Political Economy of Incentive Regulation: Theory and Evidence from US States

Carmine Guerriero

No 36755, Privatisation Regulation Corporate Governance Working Papers from Fondazione Eni Enrico Mattei (FEEM)

Abstract: The determinants of incentive regulation are a key issue in industrial policy. I study an asymmetric information model of incentive rules selection by a political principal endowed with an information-gathering technology whose efficiency increases with the effort exerted by two accountable supervisors (a regulator and a judge). This set up captures the institutions of several international markets. The model predicts that reforms toward higher powered rules are more likely the more inefficient (efficient) is the production (information-gathering) technology, the less tight is political competition and the greater are pro-consumer supervisors’ incentives. This prediction is consistent with evidence based on US electric power market data.

Pages: 47
Date: 2008-04
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Citations: View citations in EconPapers (1)

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Related works:
Journal Article: The political economy of incentive regulation: Theory and evidence from US states (2013)
Working Paper: The Political Economy of Incentive Regulation: Theory and Evidence from US States (2008)
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Persistent link: https://EconPapers.repec.org/RePEc:ags:feempr:36755

DOI: 10.22004/ag.econ.36755

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