DP4093 Does the Separation of Regulatory Powers Reduce the Threat of Capture? Evidence from the US Maritime Bureaucracy
|Author(s):||Pedro Luis Marín Uribe, Richard Sicotte|
|Publication Date:||October 2003|
|Keyword(s):||capture, regulation, shipping industry|
|JEL(s):||H1, K2, L5|
|Programme Areas:||Industrial Organization|
|Link to this Page:||www.cepr.org/active/publications/discussion_papers/dp.php?dpno=4093|
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.