This paper argues that bureaucrats are susceptible to 'minimal squawk' behavior. I develop a simple model in which a desire to avoid criticism can prompt, otherwise public-spirited, bureaucrats to behave inefficiently. Decisions are taken to keep interest groups quiet and mistakes out of the public eye. The policy implications of this behavior are at odds with the received view that agencies should be structured to minimise the threat of 'capture'. I test between theories of bureaucratic behaviour using a matched panel of U.S. State Public Utility Commissions and investor-owned electric utilities. The data soundly reject the capture hypothesis and are consistent with the minimal squawk hypothesis: longer PUC terms of office are associated with an increase in the incidence of rate reviews in periods of falling input costs and, in turn, lower household electricity bills.
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Paper provided by University of Oxford, Department of Economics in its series Economics Series Working Papers with number
344.
References listed on IDEAS Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
Scharfstein, David. & Stein, Jeremy C., 1988.
"Herd behavior and investment,"
Working papers
WP 2062-88., Massachusetts Institute of Technology (MIT), Sloan School of Management.
[Downloadable!]
Ernesto Dal Bo & Rafael Di Tella, 2003.
"Capture by Threat,"
Journal of Political Economy,
University of Chicago Press, vol. 111(5), pages 1123-1152, October.
[Downloadable!] (restricted)