Does the Separation of Regulatory Powers Reduce the Threat of Capture? Evidence from the Us Maritime Bureaucracy

30 Pages Posted: 9 Dec 2003

See all articles by Pedro L. Marin

Pedro L. Marin

Universidad Carlos III de Madrid - Department of Economics; Centre for Economic Policy Research (CEPR)

Richard A. Sicotte

University of Vermont - Department of Economics

Date Written: October 2003

Abstract

Recent economic theories have investigated the susceptibility of diverse public bureaucratic structures to capture by private industry. In particular, Laffont and Martimort (1999) propose that the separation of regulatory powers will reduce the threat of capture. We analyse investor reaction to a reorganization of the United States maritime bureaucracy that created two separate agencies to carry out the duties previously assigned to a single entity. We find strong evidence that investors interpreted the agency split as detrimental to ocean carriers, supporting the theory advanced by Laffont and Martimort. We also find some evidence that net exporting industries benefited from separation.

Keywords: Regulation, capture, shipping industry

JEL Classification: H1, K2, L5

Suggested Citation

Marin, Pedro L. and Sicotte, Richard A., Does the Separation of Regulatory Powers Reduce the Threat of Capture? Evidence from the Us Maritime Bureaucracy (October 2003). CEPR Discussion Paper No. 4093. Available at SSRN: https://ssrn.com/abstract=477424

Pedro L. Marin (Contact Author)

Universidad Carlos III de Madrid - Department of Economics ( email )

Calle Madrid 126
Getafe, 28903
Spain
+34 91 624 9646 (Phone)
+34 91 624 9875 (Fax)

Centre for Economic Policy Research (CEPR)

London
United Kingdom

Richard A. Sicotte

University of Vermont - Department of Economics ( email )

347 Old Mill
Burlington, VT 05405-4160
United States
802-006-0184 (Phone)

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