Abstract

http://ssrn.com/abstract=1890504
 


 



Capture, Politics and Antitrust Effectiveness


Rocco Ciciretti


University of Rome II - Department of Economics and Finance

Simone Meraglia


University of Toulouse 1 - Toulouse School of Economics (TSE)

Gustavo Piga


University of Rome

April 5, 2013

CEIS Working Paper No. 208

Abstract:     
We study the ex-ante budget devoted by a Political Principal to a Competition Authority in charge of collecting evidence on the Industry's behavior. The Industry can capture both the Principal (lobbying) for a reduced budget, and the Authority (side-contracting) so as to avoid fines. Authority's capture is costly to the Principal when side-contracting is sufficiently efficient. Collusion proofness induces high-powered incentives for the Authority, hence fostering the Authority's willingness to spend the allocated budget. For intermediate values of side-contracting's efficiency, in this moral hazard setting we fi nd that the optimal budget increases as side-contracting gets more efficient. Only when side-contracting's efficiency reaches high enough values the budget decreases, thus generating a discrepancy between the Authority's and the Principal's desired level of information gathering. Finally, a complementarity between lobbying of the Principal and capture of the Authority arises.

Number of Pages in PDF File: 39

Keywords: Budget, Law Enforcement, Three-tier Hierarchy, Moral Hazard, Collusion-Proofness, Lobbying

JEL Classification: D72, D73, D82, K21

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Date posted: July 20, 2011 ; Last revised: March 2, 2014

Suggested Citation

Ciciretti, Rocco and Meraglia, Simone and Piga, Gustavo, Capture, Politics and Antitrust Effectiveness (April 5, 2013). CEIS Working Paper No. 208. Available at SSRN: http://ssrn.com/abstract=1890504 or http://dx.doi.org/10.2139/ssrn.1890504

Contact Information

Rocco Ciciretti (Contact Author)
University of Rome II - Department of Economics and Finance ( email )
Via Columbia, 2
Roma, 00133
Italy
+39 06 72595929 (Phone)
HOME PAGE: http://www.economia.uniroma2.it/nuovo/facolta/docenti/docenti.asp?IdProfessore=338
Simone Meraglia
University of Toulouse 1 - Toulouse School of Economics (TSE) ( email )
Place Anatole-France
Toulouse Cedex, F-31042
France
Gustavo Piga
University of Rome ( email )
Via di Tor Vergata
Rome
Italy
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