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

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  • Marín Uribe, Pedro Luis
  • Sicotte, Richard

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.

Suggested Citation

  • Marín Uribe, Pedro Luis & Sicotte, Richard, 2003. "Does the Separation of Regulatory Powers Reduce the Threat of Capture? Evidence from the US Maritime Bureaucracy," CEPR Discussion Papers 4093, C.E.P.R. Discussion Papers.
    • Handle: RePEc:cpr:ceprdp:4093
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    References listed on IDEAS

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    1. George J. Stigler, 1971. "The Theory of Economic Regulation," Bell Journal of Economics, The RAND Corporation, vol. 2(1), pages 3-21, Spring.
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    4. Jean-Jacques Laffont & Jean Tirole, 1991. "The Politics of Government Decision-Making: A Theory of Regulatory Capture," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 106(4), pages 1089-1127.
    5. Jean-Jacques Laffont & David Martimort, 1999. "Separation of Regulators Against Collusive Behavior," RAND Journal of Economics, The RAND Corporation, vol. 30(2), pages 232-262, Summer.
    6. Lupia, Arthur & McCubbins, Mathew D, 1994. "Learning from Oversight: Fire Alarms and Police Patrols Reconstructed," The Journal of Law, Economics, and Organization, Oxford University Press, vol. 10(1), pages 96-125, April.
    7. 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.
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    More about this item

    Keywords

    Regulation; Capture; Shipping industry;
    All these keywords.

    JEL classification:

    • H1 - Public Economics - - Structure and Scope of Government
    • K2 - Law and Economics - - Regulation and Business Law
    • L5 - Industrial Organization - - Regulation and Industrial Policy

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