The public interest hypothesis revisited: A new test of Peltzman's theory of regulation

The results of the empirical work support several conclusions. First, the evidence adds additional support to the Peltzman theory of regulation. Nearly all of the variables tested support the hypotheses arising from the theory. Second, the evidence supports the conclusion that the Peltzman theory is preferred to that of the simpler predatory theory of regulatory capture. While the predator's strength is important, it is not always decisive. The public's interest can be and is maintained in many states. A third conclusion which can be drawn concerns the protection of the public interest. We now have some initial evidence which presents an explanation as to why the public interest is in some cases protected, even when it is in direct conflict with the interests of an industry or professional group. What the evidence suggests is that it is not necessarily the benevolence of the legislator which yields this result. To the contrary, it is the self-interests of the legislator and the incentive to protect those self-interests which leads to this result, in particular when the public's awareness and voting participation are high. Copyright Martinus Nijhoff Publishers 1986