Accountability in Government and Regulatory Policies: Theory and Evidence

IEFE Working Paper No. 24

50 Pages Posted: 15 Oct 2009

See all articles by Carmine Guerriero

Carmine Guerriero

Department of Economics, University of Bologna

Multiple version iconThere are 4 versions of this paper

Date Written: September 30, 2009

Abstract

A key aspect of institutional design is the degree of accountability to which the officials involved in regulation are subjected. Elected officials strive for re-election, appointed ones are career-concerned. Provided that the effort exerted to uncover the firm's unknown cost is sufficiently efficient in swaying votes, elected officials produce more information than appointed ones do. As a result, both prices and ex post rents are higher under appointment, and society will prefer this last institution whenever investment inducement is sufficiently relevant or shareholders are sufficiently more powerful than consumers. Data on electricity prices and costs, and the methods of selecting top-level regulators and High court judges for a panel of forty-nine U.S. states confirm the model's predictions.

Keywords: Election, Regulation, Judges, Electricity

JEL Classification: H11, L51, K4, Q4

Suggested Citation

Guerriero, Carmine, Accountability in Government and Regulatory Policies: Theory and Evidence (September 30, 2009). IEFE Working Paper No. 24, Available at SSRN: https://ssrn.com/abstract=1487509 or http://dx.doi.org/10.2139/ssrn.1487509

Carmine Guerriero (Contact Author)

Department of Economics, University of Bologna ( email )

Strada Maggiore 45
Bologna, 40125
Italy

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