Self-Regulating Organizations Under the Shadow of Governmental Oversight: An Experimental Investigation
37 Pages Posted: 29 May 2013 Last revised: 20 Jun 2016
Date Written: May 15, 2013
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: Suggested Citation