Self-Regulating Organizations Under the Shadow of Governmental Oversight: An Experimental Investigation

37 Pages Posted: 29 May 2013 Last revised: 20 Jun 2016

See all articles by Silvester Van Koten

Silvester Van Koten

University of Economics, Prague - Department of Institutional Economics

Andreas Ortmann

UNSW Australia Business School, School of Economics

Date Written: May 15, 2013

Abstract

Self-regulatory organizations (SROs) can be found in education, healthcare, and other not-for-profit sectors as well as the accounting, financial, and legal professions. DeMarzo et al. (2005) show theoretically that SROs can create monopoly market power for their affiliated agents, but that governmental oversight, even if less efficient than oversight by the SRO, can largely offset the market power. We provide an experimental test of this conjecture. For carefully rationalized parameterizations and implementation details, we find that the predictions of DeMarzo et al. (2005) are borne out.

Keywords: Experimental Economics, Self-regulating organizations, Governmental oversight

JEL Classification: C90, L44, G18, G28

Suggested Citation

Van Koten, Silvester and Ortmann, Andreas, Self-Regulating Organizations Under the Shadow of Governmental Oversight: An Experimental Investigation (May 15, 2013). UNSW Australian School of Business Research Paper No. 2013-13. Available at SSRN: https://ssrn.com/abstract=2270426 or http://dx.doi.org/10.2139/ssrn.2270426

Silvester Van Koten (Contact Author)

University of Economics, Prague - Department of Institutional Economics ( email )

Prague
Czech Republic

Andreas Ortmann

UNSW Australia Business School, School of Economics ( email )

High Street
Sydney, NSW 2052
Australia

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