Regulatory Capture and the Dynamics of Interventionism: The Case of Power Utilities in Quebec and Ontario to 1944

38 Pages Posted: 12 Apr 2021

See all articles by Germain Belzile

Germain Belzile

HEC Montreal - Institute of Applied Economics

Rosolino Candela

George Mason University - Mercatus Center

Vincent Geloso

George Mason University - Department of Economics

Date Written: April 9, 2021

Abstract

To what extent are the outcomes of economic regulation intended and desired by its proponents? To address this question, we combine Stigler’s theory of regulatory capture with the Austrian theory of the dynamics of interventionism. We reframe Stigler’s theory of regulatory capture as an analytical starting point for a dynamic theory of interventionism, one which accounts for the unintended consequences that emerge from regulation, even if the origins of such regulation were designed to benefit a particular industry or special interest group. Therefore, we argue that regulatory capture is not necessarily inconsistent with a dynamic theory of intervention. We illustrate this theoretical point by applying it to an econometric case study of electric utility regulation and its nationalization in both Ontario and Quebec in the early 20th century, resulting in unintended and undesirable consequences that deviated from the interests of the regulation’s intended beneficiaries.

Keywords: George Stigler, Regulatory Capture, Electric Utilities, Nationalization

JEL Classification: B51; H12; P52

Suggested Citation

Belzile, Germain and Candela, Rosolino and Geloso, Vincent, Regulatory Capture and the Dynamics of Interventionism: The Case of Power Utilities in Quebec and Ontario to 1944 (April 9, 2021). Available at SSRN: https://ssrn.com/abstract=3823212 or http://dx.doi.org/10.2139/ssrn.3823212

Germain Belzile

HEC Montreal - Institute of Applied Economics ( email )

3000, ch. de la Côte-Ste-Catherine
Montréal, Quebec H3T 2A7
Canada

Rosolino Candela

George Mason University - Mercatus Center ( email )

3434 Washington Blvd., 4th Floor
Arlington, VA 22201
United States

Vincent Geloso (Contact Author)

George Mason University - Department of Economics ( email )

4400 University Drive
Fairfax, VA 22030
United States

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