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Dependent Controllers and Regulation Policies: Theory and Evidence


  • Carmine Guerriero

    (University of Cambridge)


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

  • Carmine Guerriero, 2006. "Dependent Controllers and Regulation Policies: Theory and Evidence," Working Papers 2006.109, Fondazione Eni Enrico Mattei.
  • Handle: RePEc:fem:femwpa:2006.109

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    References listed on IDEAS

    1. Romer, Paul M, 1986. "Increasing Returns and Long-run Growth," Journal of Political Economy, University of Chicago Press, vol. 94(5), pages 1002-1037, October.
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    4. Jacint Balaguer & Manuel Cantavella-Jorda, 2002. "Tourism as a long-run economic growth factor: the Spanish case," Applied Economics, Taylor & Francis Journals, vol. 34(7), pages 877-884.
    5. Azar, Christian & Holmberg, John & Lindgren, Kristian, 1996. "Socio-ecological indicators for sustainability," Ecological Economics, Elsevier, vol. 18(2), pages 89-112, August.
    6. van den Bergh, Jeroen C. J. M. & Verbruggen, Harmen, 1999. "Spatial sustainability, trade and indicators: an evaluation of the 'ecological footprint'," Ecological Economics, Elsevier, vol. 29(1), pages 61-72, April.
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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.

    More about this item


    Election; Agency; Judges; Regulation; Electricity;

    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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