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Title:The political economy of incentive regulation: Theory and evidence from US states PDF Logo
Authors:Guerriero, Carmine
Issue Date:2008
Series/Report no.:Nota di lavoro // Fondazione Eni Enrico Mattei: PRCG, Privatisation, regulation, corporate governance 2008,34
Abstract:The determinants of incentive regulation are a key issue in industrial policy. I study an asymmetric information model of incentive rules selection by a political principal endowed with an information-gathering technology whose efficiency increases with the effort exerted by two accountable supervisors (a regulator and a judge). This set up captures the institutions of several international markets. The model predicts that reforms toward higher powered rules are more likely the more inefficient (efficient) is the production (information-gathering) technology, the less tight is political competition and the greater are pro-consumer supervisors' incentives. This prediction is consistent with evidence based on US electric power market data.
Subjects:Incentive Schemes
Accountability Rules
Regulatory Capture
JEL:D73
H11
L51
K2
Document Type:Working Paper
Appears in Collections:FEEM Working Papers, Fondazione Eni Enrico Mattei

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