Dependent Controllers and Regulation Policies: Theory and Evidence

Carmine Guerriero

No 2006.109, Working Papers from Fondazione Eni Enrico Mattei

Abstract: This paper analyzes the effects of supervisors’ (i.e., regulators and judges) selection rules on regulated prices. A checks and balances’ regulatory review process strengthens the role of the judicial power and election increases the populism of implicitly motivated supervisors. Election arises when the risk related to expropriation of sunk investments and the inter-party distance are lower. Employing U.S. electric power market’s data, the empirical evidence strongly confirms these predictions. Indeed, when treated as endogenous, only the election of administrative law judges and not the one of regulators significantly lowers the level of electricity rates. Moreover a more effective supervision technology shows a marginal negative effect on regulated rates as well.

Keywords: Election; Agency; Judges; Regulation; Electricity (search for similar items in EconPapers)
JEL-codes: K23 L51 Q43 (search for similar items in EconPapers)
Date: 2006-08
New Economics Papers: this item is included in nep-ene, nep-law and nep-reg
References: Add references at CitEc
Citations: View citations in EconPapers (3)

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Working Paper: Dependent Controllers and Regulation Policies: Theory and Evidence (2006)
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Persistent link: https://EconPapers.repec.org/RePEc:fem:femwpa:2006.109

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