Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/185714
Authors: 
Strausz, Roland
Year of Publication: 
2017
Series/Report no.: 
Discussion Paper 44
Abstract: 
Uncertainty in election outcomes generates politically induced regulatory risk. For monopoly regulation, political parties\' risk attitudes towards such risk depend on a fluctuation effect that hurts both parties and an output--expansion effect that benefits at least one party. Irrespective of the parties\' risk attitudes, political parties have incentives to negotiate away regulatory risk by pre-electoral bargaining. Pareto-efficient bargaining outcomes fully eliminate regulatory risk and are attainable through institutionalizing independent regulatory agencies with a specific objective. Key aspects of the regulatory overhaul of the US Postal system in 1970 are argued to be consistent with these results.
Subjects: 
regulation
independent regulatory agency
regulatory risk
electoral uncertainty
JEL: 
D82
Document Type: 
Working Paper
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