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Consumer capture of regulatory institutions: The creation of public utility consumer advocates in the United States

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  • Guy Holburn

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  • Richard Bergh

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    Abstract

    We examine the conditions under which state legislatures in the United States organized public utility consumers during the 1970s and 1980s by creating independent consumer advocates with resources and authority to intervene in public utility rate-making procedures. While economic factors, notably utility fuel cost increases, were important predictors, state political conditions were estimated to have a larger impact on the probability of implementation. We find that the pattern of adoption is consistent with the hypothesis that legislatures deploy institutions as a mechanism for insulating regulatory policies against future reform: in general, Democrat-controlled governments were significantly more likely to implement consumer advocates when they were less certain about being re-elected to office during this period. We find also that the effect of political re-election expectations was particularly acute for the creation of advocates representing solely residential consumers, a relatively disorganized interest group. Our results suggest that legislatures organize and publicly fund interest groups to protect supportive but vulnerable groups against adverse future political environments. Copyright Springer Science + Business Media, Inc. 2006

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    File URL: http://hdl.handle.net/10.1007/s11127-006-4317-y
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    Bibliographic Info

    Article provided by Springer in its journal Public Choice.

    Volume (Year): 126 (2006)
    Issue (Month): 1 (January)
    Pages: 45-73

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    Handle: RePEc:kap:pubcho:v:126:y:2006:i:1:p:45-73

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    Web page: http://www.springerlink.com/link.asp?id=100332

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    1. Rodrik, Dani, 1991. "Policy uncertainty and private investment in developing countries," Journal of Development Economics, Elsevier, vol. 36(2), pages 229-242, October.
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    8. Tiller, Emerson H, 1998. "Controlling Policy by Controlling Process: Judicial Influence on Regulatory Decision Making," Journal of Law, Economics and Organization, Oxford University Press, vol. 14(1), pages 114-35, April.
    9. McCubbins, Mathew D & Noll, Roger G & Weingast, Barry R, 1987. "Administrative Procedures as Instruments of Political Control," Journal of Law, Economics and Organization, Oxford University Press, vol. 3(2), pages 243-77, Fall.
    10. Gordon C. Rausser, 1992. "Predatory versus Productive Government: The Case of U.S. Agricultural Policies," Journal of Economic Perspectives, American Economic Association, vol. 6(3), pages 133-157, Summer.
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    Cited by:
    1. Stephen Littlechild, 2009. "Stipulated settlements, the consumer advocate and utility regulation in Florida," Journal of Regulatory Economics, Springer, vol. 35(1), pages 96-109, February.
    2. Guerriero, Carmine, 2011. "Accountability in government and regulatory policies: Theory and evidence," Journal of Comparative Economics, Elsevier, vol. 39(4), pages 453-469.
    3. Doucet, Joseph & Littlechild, Stephen, 2006. "Negotiated settlements: The development of legal and economic thinking," Utilities Policy, Elsevier, vol. 14(4), pages 266-277, December.
    4. Littlechild, S., 2007. "The bird in hand: stipulated settlements and electricity regulation in Florida," Cambridge Working Papers in Economics 0713, Faculty of Economics, University of Cambridge.
    5. Magnus Söderberg & Makoto Tanaka, 2012. "Spatial price homogeneity as a mechanism to reduce the threat of regulatory intervention in locally monopolistic sectors," Working Papers hal-00659458, HAL.

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