publication . Research . Conference object . Book . Preprint . 2010

The political economy of regulatory risk

Roland Strausz;
Open Access English
  • Published: 01 Jan 2010
  • Publisher: Munich: Center for Economic Studies and ifo Institute (CESifo)
  • Country: Germany
The paper investigates political uncertainty as a source of regulatory risk. It shows that political parties have incentives to reduce regulatory risk actively: Mutually beneficial pre-electoral agreements that reduce regulatory risk always exist and fully eliminate it when political divergence is small or electoral uncertainty is appropriately skewed. These results follow from a fluctuation effect of regulatory risk that hurts both parties and an output-expansion effect that benefits at most one party. Due to commitment problems, politically independent regulatory agencies are needed to implement pre-electoral agreements. Optimal delegation may require only par...
free text keywords: D82, regulation, regulatory risk, political economy, electoral uncertainty, independent regulatory agency, Regulierung, Politische Entscheidung, Risiko, Aufsichtsbehörde, Selbstverwaltung, Public Choice, Theorie, L51, L12, 330 Wirtschaft, regulation, regulatory risk, political economy, independent regulatory agency, regulation, regulatory risk, political economy, electoral uncertainty, independent regulatory agency, ddc:330, jel:D82
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