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Title:The political economy of regulatory risk PDF Logo
Authors:Strausz, Roland
Issue Date:2010
Series/Report no.:CESifo working paper 2953
Abstract:This paper investigates political uncertainty as a source of regulatory risk. It shows that political parties have incentives to reduce regulatory risk actively: Mutually beneficial pre-electoral agreements that reduce regulatory risk always exist. Agreements that fully eliminate it exist when political divergence is small or electoral uncertainty is appropriately skewed. These results follow from a fluctuation effect of regulatory risk that hurts parties and an output-expansion effect that benefits at most one party. Due to commitment problems, regulatory agencies with some degree of political independence are needed to implement pre-electoral agreements.
regulatory risk
political economy
electoral uncertainty
independent regulatory agency
Document Type:Working Paper
Appears in Collections:CESifo Working Papers, CESifo Group Munich

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