Activists versus Captured Regulators
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Date
2013-10
Publication Type
Working Paper
ETH Bibliography
yes
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Abstract
We analyze the consequences of activism in a regulated industry where the regulator has been captured by the industry. Unlike ordinary economic agents, activists are insensitive to monetary incentives. Moreover, they are less well informed than regulators and their actions generate dead-weight costs. Yet we find that activism may increase social welfare because it disciplines captured regulators and reduces the social cost of imperfect regulatory systems.
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Publication status
published
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Journal / series
Volume
4444
Pages / Article No.
Publisher
CESifo
Event
Edition / version
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Software
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Date collected
Date created
Subject
Public regulation; Regulatory capture; Pro-industry bias; Private politics; Activism
Organisational unit
03635 - Bretschger, Lucas (emeritus) / Bretschger, Lucas (emeritus)