IDEAS home Printed from https://ideas.repec.org/p/mlb/wpaper/1113.html
   My bibliography  Save this paper

Regulatory Fog: The Informational Origins of Regulatory Persistence

Author

Listed:
  • Patrick Warren
  • Tom Wilkening

Abstract

Compared with other types of policy, regulation is very persistent, even when inefficient. We propose an explanation for regulatory persistence based on regulatory fog,the phenomenon by which regulation obscures information about the e ects of deregulation. We construct a dynamic model of regulation in which the underlying need for regulation varies stochastically, and regulation undermines the regulator's ability to observe the state of the world. Compared to the full-information benchmark, regulation is highly persistent, often lasting inde nitely. The regulatory fog e ect is robust to a broad range of partially informative policies and can be quite detrimental to social welfare.

Suggested Citation

  • Patrick Warren & Tom Wilkening, 2010. "Regulatory Fog: The Informational Origins of Regulatory Persistence," Department of Economics - Working Papers Series 1113, The University of Melbourne.
    • Handle: RePEc:mlb:wpaper:1113
    as

    Download full text from publisher

    File URL: http://fbe.unimelb.edu.au/__data/assets/pdf_file/0011/801020/1113.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Zhao, Jinhua & Kling, Catherine L., 2003. "Policy persistence in environmental regulation," Resource and Energy Economics, Elsevier, vol. 25(3), pages 255-268, August.
    2. Thomas Piketty & Emmanuel Saez, 2007. "How Progressive is the U.S. Federal Tax System? A Historical and International Perspective," Journal of Economic Perspectives, American Economic Association, vol. 21(1), pages 3-24, Winter.
    3. Marco Ottaviani & Giuseppe Moscarini & Lones Smith, 1998. "Social learning in a changing world," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 11(3), pages 657-665.
    4. Braillard, S. Lael & Verdier, Thierry, 1994. "Lobbying and adjustment in declining industries," European Economic Review, Elsevier, vol. 38(3-4), pages 586-595, April.
    5. Pindyck, Robert S., 2000. "Irreversibilities and the timing of environmental policy," Resource and Energy Economics, Elsevier, vol. 22(3), pages 233-259, July.
    6. Stephen Morris & Stephen Coate, 1999. "Policy Persistence," American Economic Review, American Economic Association, vol. 89(5), pages 1327-1336, December.
    7. Douglas Gale, 1996. "Delay and Cycles," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 63(2), pages 169-198.
    8. Vladimir Gligorov, 2009. "Mobility and Transition in Integrating Europe," Human Development Research Papers (2009 to present) HDRP-2009-15, Human Development Report Office (HDRO), United Nations Development Programme (UNDP), revised Apr 2009.
    9. Hirshleifer, J & Riley, John G, 1979. "The Analytics of Uncertainty and Information-An Expository Survey," Journal of Economic Literature, American Economic Association, vol. 17(4), pages 1375-1421, December.
    10. Nancy L. Rose, 1985. "The Incidence of Regulatory Rents in the Motor Carrier Industry," RAND Journal of Economics, The RAND Corporation, vol. 16(3), pages 299-318, Autumn.
    11. Koleman S. Strumpf, 2002. "Does Government Decentralization Increase Policy Innovation?," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 4(2), pages 207-241, April.
    12. Robert N. Rubinovitz, 1993. "Market Power and Price Increases for Basic Cable Service Since Deregulation," RAND Journal of Economics, The RAND Corporation, vol. 24(1), pages 1-18, Spring.
    13. Dirk Bergemann & Juuso Valimaki, 2006. "Bandit Problems," Cowles Foundation Discussion Papers 1551, Cowles Foundation for Research in Economics, Yale University.
    14. Strumpf, Koleman S, 2002. "Does Government Decentralization Increase Policy Innovation?," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 4(2), pages 207-241.
    15. Barrett Sean D., 2008. "Exporting Deregulation - Alfred Kahn and the Celtic Tiger," Review of Network Economics, De Gruyter, vol. 7(4), pages 1-30, December.
    16. Kenneth D. Boyer, 1987. "The Costs of Price Regulation: Lessons from Railroad Deregulation," RAND Journal of Economics, The RAND Corporation, vol. 18(3), pages 408-416, Autumn.
    17. Clare Leaver, 2009. "Bureaucratic Minimal Squawk Behavior: Theory and Evidence from Regulatory Agencies," American Economic Review, American Economic Association, vol. 99(3), pages 572-607, June.
    18. Christian Dustmann & Francesca Fabbri & Ian Preston, 2005. "The Impact of Immigration on the British Labour Market," Economic Journal, Royal Economic Society, vol. 115(507), pages 324-341, November.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Warren, Patrick L. & Wilkening, Tom S., 2012. "Regulatory fog: The role of information in regulatory persistence," Journal of Economic Behavior & Organization, Elsevier, vol. 84(3), pages 840-856.
    2. Charles Sims & David Finnoff, 2016. "Opposing Irreversibilities and Tipping Point Uncertainty," Journal of the Association of Environmental and Resource Economists, University of Chicago Press, vol. 3(4), pages 985-1022.
    3. Stefano Barbieri & Marco Serena, 2020. "Fair Representation in Primaries: Heterogeneity and the New Hampshire Effect," Working Papers tax-mpg-rps-2020-07, Max Planck Institute for Tax Law and Public Finance.
    4. Lars P. Feld & Horst Zimmermann & Thomas Döring, 2003. "Föderalismus, Dezentralität und Wirtschaftswachstum," Vierteljahrshefte zur Wirtschaftsforschung / Quarterly Journal of Economic Research, DIW Berlin, German Institute for Economic Research, vol. 72(3), pages 361-377.
    5. Tinghua Yu, 2021. "Intrinsic Motivation, Office Incentives, and Innovation," BCAM Working Papers 2106, Birkbeck Centre for Applied Macroeconomics.
    6. Ana B. Ania & Andreas Wagener, 2021. "Laboratory federalism with public funds sharing," Economic Inquiry, Western Economic Association International, vol. 59(3), pages 1047-1065, July.
    7. Thushyanthan Baskaran & Lars P. Feld & Jan Schnellenbach, 2016. "Fiscal Federalism, Decentralization, And Economic Growth: A Meta-Analysis," Economic Inquiry, Western Economic Association International, vol. 54(3), pages 1445-1463, July.
    8. William M. Shobe & Dallas Burtraw, 2012. "Rethinking Environmental Federalism In A Warming World," Climate Change Economics (CCE), World Scientific Publishing Co. Pte. Ltd., vol. 3(04), pages 1-33.
    9. John Ashworth & Emma Galli & Fabio Padovano, 2013. "Decentralization as a constraint to Leviathan: a panel cointegration analysis," Public Choice, Springer, vol. 156(3), pages 491-516, September.
    10. Hefeker Carsten, 2019. "Helping with the Homework: Support Mechanisms for Uncertain Reforms in a Monetary Union," Journal of Economics and Statistics (Jahrbuecher fuer Nationaloekonomie und Statistik), De Gruyter, vol. 239(5-6), pages 983-1004, October.
    11. Christos Kotsogiannis & Robert Schwager, 2005. "Policy Innovation In Federal Systems," Urban/Regional 0504001, University Library of Munich, Germany.
    12. Behrens, Kristian & Gaigné, Carl & Thisse, Jacques-François, 2009. "Industry location and welfare when transport costs are endogenous," Journal of Urban Economics, Elsevier, vol. 65(2), pages 195-208, March.
    13. Lourens Broersma & Arjen Edzes & Jouke van Dijk, 2011. "Have Dutch Municipalities Become More Efficient in Managing the Costs of Social Assistance Dependency? (refereed paper)," ERSA conference papers ersa10p177, European Regional Science Association.
    14. Zhao, Jinhua & Kling, Catherine L., 2003. "Policy persistence in environmental regulation," Resource and Energy Economics, Elsevier, vol. 25(3), pages 255-268, August.
    15. Guy Holburn & Richard Bergh, 2006. "Consumer capture of regulatory institutions: The creation of public utility consumer advocates in the United States," Public Choice, Springer, vol. 126(1), pages 45-73, January.
    16. Millimet, Daniel L., 2013. "Environmental Federalism: A Survey of the Empirical Literature," IZA Discussion Papers 7831, Institute of Labor Economics (IZA).
    17. Boadway, Robin & Tremblay, Jean-François, 2012. "Reassessment of the Tiebout model," Journal of Public Economics, Elsevier, vol. 96(11), pages 1063-1078.
    18. Jessica Coria & Magnus Hennlock, 2012. "Taxes, permits and costly policy response to technological change," Environmental Economics and Policy Studies, Springer;Society for Environmental Economics and Policy Studies - SEEPS, vol. 14(1), pages 35-60, January.
    19. Jean-Robert Tyran & Rupert Sausgruber, 2005. "The diffusion of policy innovations -an experimental investigation," Journal of Evolutionary Economics, Springer, vol. 15(4), pages 423-442, October.
    20. Yifan Yang & Hongda Liu, 2024. "Sustainable Media and Green Innovation: The Impact of Sustainable Atmosphere and Environmental Regulation on Manufacturing Enterprises," Sustainability, MDPI, vol. 16(8), pages 1-17, April.

    More about this item

    Keywords

    Regulation; Information; Experimentation;
    All these keywords.

    JEL classification:

    • L51 - Industrial Organization - - Regulation and Industrial Policy - - - Economics of Regulation
    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
    • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:mlb:wpaper:1113. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Dandapani Lokanathan (email available below). General contact details of provider: https://edirc.repec.org/data/demelau.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.