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Dependent Controllers and Regulation Policies: Theory and Evidence

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  • Guerriero, Carmine

Abstract

This paper analyzes the effects of supervisors' (i.e., regulators and judges) selection rules on regulated prices. A checks and balances regulatory review process strengthens the role of the judicial power and election increases the populism of implicitly motivated supervisors. Election arises when the risk related to expropriation of sunk investments and the inter-party distance are lower. Employing U.S. electric power market's data, the empirical evidence strongly confirms these predictions. Indeed, when treated as endogenous, only the election of administrative law judges and not the one of regulators significantly lowers the level of electricity rates. Moreover a more effective supervision technology shows a marginal negative effect on regulated rates as well.

Suggested Citation

  • Guerriero, Carmine, 2006. "Dependent Controllers and Regulation Policies: Theory and Evidence," Privatisation Regulation Corporate Governance Working Papers 12204, Fondazione Eni Enrico Mattei (FEEM).
    • Handle: RePEc:ags:feempr:12204
    DOI: 10.22004/ag.econ.12204
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    Cited by:

    1. Estache, Antonio & Wren-Lewis, Liam, 2010. "What Anti-Corruption Policy Can Learn from Theories of Sector Regulation," CEPR Discussion Papers 8082, C.E.P.R. Discussion Papers.
    2. Guerriero, Carmine, 2006. "Endogenous Price Mechanisms, Capture and Accountability Rules: Theory and Evidence," Privatisation Regulation Corporate Governance Working Papers 12197, Fondazione Eni Enrico Mattei (FEEM).

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    More about this item

    Keywords

    Agricultural and Food Policy;

    JEL classification:

    • K23 - Law and Economics - - Regulation and Business Law - - - Regulated Industries and Administrative Law
    • L51 - Industrial Organization - - Regulation and Industrial Policy - - - Economics of Regulation
    • Q43 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Energy and the Macroeconomy

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