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Does the Separation of Regulatory Powers Reduce the Threat of Capture? Evidence from the US Maritime Bureaucracy

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  • Marín Uribe, Pedro Luis
  • Sicotte, Richard

Abstract

Recent economic theories have investigated the susceptibility of diverse public bureaucratic structures to capture by private industry. In particular, Laffont and Martimort (1999) propose that the separation of regulatory powers will reduce the threat of capture. We analyse investor reaction to a reorganization of the United States maritime bureaucracy that created two separate agencies to carry out the duties previously assigned to a single entity. We find strong evidence that investors interpreted the agency split as detrimental to ocean carriers, supporting the theory advanced by Laffont and Martimort. We also find some evidence that net exporting industries benefited from separation.

Suggested Citation

  • Marín Uribe, Pedro Luis & Sicotte, Richard, 2003. "Does the Separation of Regulatory Powers Reduce the Threat of Capture? Evidence from the US Maritime Bureaucracy," CEPR Discussion Papers 4093, C.E.P.R. Discussion Papers.
  • Handle: RePEc:cpr:ceprdp:4093
    as

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    References listed on IDEAS

    as
    1. Jean-Jacques Laffont & David Martimort, 1999. "Separation of Regulators Against Collusive Behavior," RAND Journal of Economics, The RAND Corporation, vol. 30(2), pages 232-262, Summer.
    2. Jean-Jacques Laffont & Jean Tirole, 1991. "The Politics of Government Decision-Making: A Theory of Regulatory Capture," The Quarterly Journal of Economics, Oxford University Press, vol. 106(4), pages 1089-1127.
    3. Lupia, Arthur & McCubbins, Mathew D, 1994. "Learning from Oversight: Fire Alarms and Police Patrols Reconstructed," Journal of Law, Economics, and Organization, Oxford University Press, vol. 10(1), pages 96-125, April.
    4. Morris Fiorina, 1982. "Legislative choice of regulatory forms: Legal process or administrative process?," Public Choice, Springer, vol. 39(1), pages 33-66, January.
    5. Nancy L. Rose, 1985. "The Incidence of Regulatory Rents in the Motor Carrier Industry," RAND Journal of Economics, The RAND Corporation, vol. 16(3), pages 299-318, Autumn.
    6. 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 243-277, Fall.
    7. John J. Binder, 1985. "Measuring the Effects of Regulation with Stock Price Data," RAND Journal of Economics, The RAND Corporation, vol. 16(2), pages 167-183, Summer.
    8. Schwert, G William, 1981. "Using Financial Data to Measure Effects of Regulation," Journal of Law and Economics, University of Chicago Press, vol. 24(1), pages 121-158, April.
    9. McNollgast, 1999. "The Political Origins of the Administrative Procedure Act," Journal of Law, Economics, and Organization, Oxford University Press, vol. 15(1), pages 180-217, April.
    10. A. Craig MacKinlay, 1997. "Event Studies in Economics and Finance," Journal of Economic Literature, American Economic Association, vol. 35(1), pages 13-39, March.
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    More about this item

    Keywords

    capture; regulation; shipping industry;

    JEL classification:

    • H1 - Public Economics - - Structure and Scope of Government
    • K2 - Law and Economics - - Regulation and Business Law
    • L5 - Industrial Organization - - Regulation and Industrial Policy

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