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The Life Cycle of Regulatory Agencies: Dynamic Capture and Transaction Costs

The Life Cycle of Regulatory Agencies: Dynamic Capture and Transaction Costs The dynamics of regulation is analysed in a model where regulatory capture comes from the repeated interaction between an interest group and a regulatory agency. Regulatory institutions offer a framework for this dynamic process. They put constraints on the interest group's influence. The dynamics of regulation and its long-run outcome depend on the political principal's, the regulator's and the regulated firm's time preferences and their information. Some foundations for the transaction costs of side-contracting used in the standard literature on collusion are provided. Those transaction costs are linked to the precise nature of regulatory institutions. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png The Review of Economic Studies Oxford University Press

The Life Cycle of Regulatory Agencies: Dynamic Capture and Transaction Costs

The Review of Economic Studies , Volume 66 (4) – Oct 1, 1999

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Publisher
Oxford University Press
Copyright
© Published by Oxford University Press.
Subject
Articles
ISSN
0034-6527
eISSN
1467-937X
DOI
10.1111/1467-937X.00114
Publisher site
See Article on Publisher Site

Abstract

The dynamics of regulation is analysed in a model where regulatory capture comes from the repeated interaction between an interest group and a regulatory agency. Regulatory institutions offer a framework for this dynamic process. They put constraints on the interest group's influence. The dynamics of regulation and its long-run outcome depend on the political principal's, the regulator's and the regulated firm's time preferences and their information. Some foundations for the transaction costs of side-contracting used in the standard literature on collusion are provided. Those transaction costs are linked to the precise nature of regulatory institutions.

Journal

The Review of Economic StudiesOxford University Press

Published: Oct 1, 1999

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