Effectiveness of regulatory interventions on firm behavior

Eelko Huizingh and Machiel Mulder

No 14011-EEF, Research Report from University of Groningen, Research Institute SOM (Systems, Organisations and Management)

Abstract: Economic regulators use a number of instruments to change the behavior of economic agents, but only limited evidence exists on the effectiveness of such regulatory interventions. We conduct a randomized field experiment to determine the effects of two interventions aimed at e-commerce firms by a regulatory authority in order to let these firms meet legal obligations regarding information disclosure to protect consumer interests. We measure the compliance behavior of e-commerce firms in both a treatment group and a control group before and after two interventions. The first regulatory intervention concerns sending personalized letters to firms (firm-specific guidance), whereas the second intervention includes a number of dedicated publications and presentations by the regulatory authority (industry guidance). We find that both of these interventions have hardly any effect, neither in the short term nor in the long term. We conclude that regulatory interventions in the form of providing only guidance on the legal rules to firms are not effective strategies to influence their behavior.

Date: 2014
New Economics Papers: this item is included in nep-bec and nep-exp
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Citations: View citations in EconPapers (2)

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