Does the Separation of Regulatory Powers Reduce the Threat of Capture? Evidence from the US Maritime Bureaucracy
Pedro L. Marin
Universidad Carlos III de Madrid - Department of Economics; Centre for Economic Policy Research (CEPR)
Richard A. Sicotte
University of Vermont - Department of Economics
CEPR Discussion Paper No. 4093
Recent economic theories have investigated the susceptibility of diverse public bureaucratic structures to capture by private industry. In particular, Laffont and Martimort (1999) propose that the separation of regulatory powers will reduce the threat of capture. We analyse investor reaction to a reorganization of the United States maritime bureaucracy that created two separate agencies to carry out the duties previously assigned to a single entity. We find strong evidence that investors interpreted the agency split as detrimental to ocean carriers, supporting the theory advanced by Laffont and Martimort. We also find some evidence that net exporting industries benefited from separation.
Number of Pages in PDF File: 30
Keywords: Regulation, capture, shipping industry
JEL Classification: H1, K2, L5working papers series
Date posted: December 9, 2003
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