The Politics of Government Decision-Making: A Theory of Regulatory Capture

@article{citeulike:2565117, abstract = {The paper develops an agency-theoretic approach to interest-group politics and shows the following: (1) the organizational response to the possibility of regulatory agency politics is to reduce the stakes interest groups have in regulation. (2) The threat of producer protection leads to low-powered incentive schemes for regulated firms. (3) Consumer politics may induce uniform pricing by a multiproduct firm. (4) An interest group has more power when its interest lies in inefficient rather than efficient regulation, where inefficiency is measured by the degree of informational asymmetry between the regulated industry and the political principal (Congress).}, author = {Laffont, Jean-Jacques and Tirole, Jean}, citeulike-article-id = {2565117}, doi = {10.2307/2937958}, journal = {The Quarterly Journal of Economics}, keywords = {agency, contract, political\_economy, regulation}, number = {4}, pages = {1089--1127}, posted-at = {2008-07-02 08:54:02}, priority = {4}, title = {The Politics of Government Decision-Making: A Theory of Regulatory Capture}, url = {http://dx.doi.org/10.2307/2937958}, volume = {106}, year = {1991} }

TY - JOUR ID - citeulike:2565117 L3 - citeulike-article-id:2565117 N2 - The paper develops an agency-theoretic approach to interest-group politics and shows the following: (1) the organizational response to the possibility of regulatory agency politics is to reduce the stakes interest groups have in regulation. (2) The threat of producer protection leads to low-powered incentive schemes for regulated firms. (3) Consumer politics may induce uniform pricing by a multiproduct firm. (4) An interest group has more power when its interest lies in inefficient rather than efficient regulation, where inefficiency is measured by the degree of informational asymmetry between the regulated industry and the political principal (Congress). IS - 4 JF - The Quarterly Journal of Economics EP - 1127 TI - The Politics of Government Decision-Making: A Theory of Regulatory Capture VL - 106 SP - 1089 KW - agency KW - contract KW - political_economy KW - regulation AU - Laffont, Jean-Jacques AU - Tirole, Jean PY - 1991/// UR - http://dx.doi.org/10.2307/2937958 ER -