Arbeitspapier
A Dynamic Theory of Regulatory Capture
Firms have incentives to influence regulators' decisions. In a dynamic setting, we show that a firm may prefer to capture regulators through the promise of a lucrative future job opportunity (i.e., the revolving-door channel) than through a hidden payment (i.e., a bribe). This is because the revolving door publicly signals the firm's eagerness and commitment to reward friendly regulators, which facilitates collusive equilibria. Moreover, the revolving-door channel need not require an explicit agreement between the firm and the regulator, but may work implicitly giving rise to an industry norm. This renders ineffective standard anti-corruption practices, such as whistle-blowing protection policies. We highlight that closing the revolving door may give rise to other inefficiencies. Moreover, we show that cooling-off periods may make all players worse off if timed wrongly. Opening the revolving door conditional on the regulator's report may increase social welfare.
- Sprache
-
Englisch
- Erschienen in
-
Series: Working Papers in Economics and Statistics ; No. 2020-12
- Klassifikation
-
Wirtschaft
Asymmetric and Private Information; Mechanism Design
Public Sector Labor Markets
Regulated Industries and Administrative Law
Transactional Relationships; Contracts and Reputation; Networks
Economics of Regulation
- Thema
-
collusion
corruption
dynamic games
experts
regulation
regulatory capture
revolving door
- Ereignis
-
Geistige Schöpfung
- (wer)
-
De Chiara, Alessandro
Schwarz, Marco
- Ereignis
-
Veröffentlichung
- (wer)
-
University of Innsbruck, Research Platform Empirical and Experimental Economics (eeecon)
- (wo)
-
Innsbruck
- (wann)
-
2020
- Handle
- Letzte Aktualisierung
-
10.03.2025, 11:44 MEZ
Datenpartner
ZBW - Deutsche Zentralbibliothek für Wirtschaftswissenschaften - Leibniz-Informationszentrum Wirtschaft. Bei Fragen zum Objekt wenden Sie sich bitte an den Datenpartner.
Objekttyp
- Arbeitspapier
Beteiligte
- De Chiara, Alessandro
- Schwarz, Marco
- University of Innsbruck, Research Platform Empirical and Experimental Economics (eeecon)
Entstanden
- 2020
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