Does the Separation of Regulatory Powers Reduce the Threat of Capture? Evidence from the US Maritime Bureaucracy

Marín Uribe, Pedro Luis and Richard Sicotte

No 4093, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: Recent economic theories have investigated the susceptibility of diverse public bureaucratic structures to capture by private industry. In particular, Laffont and Martimort (1999) propose that the separation of regulatory powers will reduce the threat of capture. We analyse investor reaction to a reorganization of the United States maritime bureaucracy that created two separate agencies to carry out the duties previously assigned to a single entity. We find strong evidence that investors interpreted the agency split as detrimental to ocean carriers, supporting the theory advanced by Laffont and Martimort. We also find some evidence that net exporting industries benefited from separation.

Keywords: Regulation; Capture; Shipping industry (search for similar items in EconPapers)
JEL-codes: H1 K2 L5 (search for similar items in EconPapers)
Date: 2003-10
New Economics Papers: this item is included in nep-com, nep-law, nep-pol and nep-reg
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