Accountability in Government and Regulatory Policies: Theory and Evidence

40 Pages Posted: 31 Aug 2010 Last revised: 30 Mar 2011

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: July 20, 2010

Abstract

A key aspect of institutional design is the degree of accountability to which the officials involved in regulation are subjected. While 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 effective in swaying votes, elected officials produce more information than appointed ones do. This implies that, whenever the demand is inelastic, both allocative distortions and the firm's rent are higher under appointment. Hence, appointment will prevail on election when investment inducement is sufficiently relevant and shareholders are sufficiently more powerful than consumers. Data on electricity rates and costs, and the methods of selecting top-level regulators and appellate judges for a panel of forty-seven U.S. states confirm these 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 (July 20, 2010). Amsterdam Center for Law & Economics Working Paper No. 2010-08, Available at SSRN: https://ssrn.com/abstract=1668510 or http://dx.doi.org/10.2139/ssrn.1668510

Carmine Guerriero (Contact Author)

Department of Economics, University of Bologna ( email )

Strada Maggiore 45
Bologna, 40125
Italy

Here is the Coronavirus
related research on SSRN

Paper statistics

Downloads
63
Abstract Views
818
rank
127,808
PlumX Metrics