Interest Groups and Regulatory Capture

2019 ◽  
pp. 584-603
Author(s):  
William F. Shughart ◽  
Diana W. Thomas
Keyword(s):  
Interest Groups ◽  
Empirical Studies ◽  
Spillover Effects ◽  
Revolving Door ◽  
Regulatory Agencies ◽  
Special Interest Groups ◽  
Economic Regulation ◽  
Regulatory Capture ◽  
Market Outcomes ◽  
Regulated Firms

Economic orthodoxy before 1971 suggested that regulatory intervention could improve on market outcomes in cases of market power, negative spillover effects, or asymmetric information. That orthodoxy was overturned in 1971 with the publication of George Stigler’s “Theory of Economic Regulation,” which concludes that regulatory agencies are vulnerable to capture by special interest groups who shape regulatory outcomes in ways that benefit the regulated industry itself at consumers’ expense. Many empirical studies have since then confirmed Stigler’s theoretical insights. This chapter summarizes the major theoretical and empirical contributions to the literature on economic regulation, provides an overview of the various groups that can capture the regulatory process, and summarizes more recent contributions highlighting regulation’s regressive effects and the “revolving door” between regulatory agencies and regulated firms.

Corruption, Quasi-Rents, and the Regulation of Electric Utilities

2008 ◽  
Vol 68 (4) ◽  
pp. 1059-1097 ◽  
Author(s):  
JOHN L. NEUFELD
Keyword(s):  
Interest Groups ◽  
Special Interest ◽  
Electric Utilities ◽  
Hazard Analysis ◽  
Empirical Studies ◽  
Special Interest Groups ◽  
Utility Regulation ◽  
Monopoly Rents

Was the adoption of state utility regulation the result of a negative-sum competition among special interest groups vying for the monopoly rents created by regulation or a positive-sum elimination of corruption arising from appropriable quasi-rents? Previous empirical studies of the adoption of regulation have assumed the former. Using discrete hazard analysis, this study considers the latter and finds the data more consistent with the positive-sum protection of quasi-rents than the negative-sum creation and appropriation of monopoly rents.

In and Out of the Revolving Door: Making Sense of Regulatory Capture

1992 ◽  
Vol 12 (1) ◽  
pp. 61-78 ◽  
Author(s):  
Toni Makkai ◽  
John Braithwaite
Keyword(s):  
Senior Management ◽  
Revolving Door ◽  
Character Trait ◽  
Regulatory Capture ◽  
Regulatory Enforcement ◽  
Making Sense ◽  
Regulated Firms ◽  
History Of ◽  
Management Experience ◽  
Over Time

ABSTRACTThe concept of regulatory capture is multidimensional according to data from Australian nursing home inspectors. There are three empirically distinct forms of capture: identification with the industry, sympathy with the particular problems that regulated firms confront in meeting standards, and absence of toughness. Inspectors who have prior senior management experience in the industry tend to be less tough in their attitudes to regulatory enforcement. For the other two types of capture, it is not coming in the revolving door (from an industry job), but aspirations to go out of the revolving door (to an industry job) that predicts capture. Captured regulatory attitudes and revolving door variables have little power, however, in explaining the toughness of actual enforcement practices. We do find that over time tougher inspectors are more likely to leave the regulatory agency than softer inspectors. These data are used to inform a policy analysis of capture and corruption. It is concluded that there is limited analytical merit in a conception of capture as an enduring unitary character trait that is structurally determined by a history of interest group affiliations. Capture, we attempt to show, is instead a situational problem that requires situational solutions. Constraining the free movement of the revolving door by restricting regulatory appointments from or to the regulated industry is an example of a flawed policy grounded in an overdrawn structural determinism.

Independent Regulatory Agencies and Their Reform

2019 ◽  
pp. 171-188
Author(s):  
Paul Dragos Aligica ◽  
Peter J. Boettke ◽  
Vlad Tarko
Keyword(s):  
Rent Seeking ◽  
Conventional Wisdom ◽  
Revolving Door ◽  
Regulatory Agencies ◽  
Regulatory Capture ◽  
Government Organizations ◽  
Democratic Administration ◽  
Governance Systems ◽  
Independent Regulatory Agencies ◽  
Regulatory Problems

Chapter 8 explores the issue of independent regulatory agencies. Independent regulatory agencies are seen as a serious challenge to democratic administration. They are government organizations of unelected officials, they often resist even mild audit attempts and they are very vulnerable to corruption, rent-seeking, regulatory capture and revolving door problems. The chapter notes first why independent regulatory agencies may nonetheless respond to a genuine need, namely they are one way of addressing “common-pool regulatory problems”, i.e. controversial but hard to be decentralized problems. Then the chapter presents an approach leading to a better understanding of the independent regulatory agencies’ operations and to their possible improvement. An in-depth look questions thus the conventional wisdom regarding IRAs and their functioning in the larger architecture of contemporary governance systems.

scholarly journals Mapping Political Communities: A Statistical Analysis of Lobbying Networks in Legislative Politics

2020 ◽  
pp. 1-20 ◽  
Author(s):  
In Song Kim ◽  
Dmitriy Kunisky
Keyword(s):  
Interest Groups ◽  
Empirical Studies ◽  
Special Interest Groups ◽  
Legislative Politics ◽  
Political Actors ◽  
Quantitative Measurements ◽  
Original Dataset ◽  
Committee Membership ◽  
Group Politics ◽  
Political Communities

Abstract We propose a new methodology for inferring political actors’ latent memberships in communities of collective activity that drive their observable interactions. Unlike existing methods, the proposed Bipartite Link Community Model (biLCM) (1) applies to two groups of actors, (2) takes into account that actors may be members of more than one community, and (3) allows a pair of actors to interact in more than one way. We apply this method to characterize legislative communities of special interest groups and politicians in the 113th U.S. Congress. Previous empirical studies of interest group politics have been limited by the difficulty of observing the ties between interest groups and politicians directly. We therefore first construct an original dataset that connects the politicians who sponsor congressional bills with the interest groups that lobby on those bills based on more than two million textual descriptions of lobbying activities. We then use the biLCM to make quantitative measurements of actors’ community memberships ranging from narrow targeted interactions according to industry interests and jurisdictional committee membership to broad multifaceted connections across multiple policy domains.

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