Citation

Discussion Paper Details

Please find the details for DP2274 in an easy to copy and paste format below:

Full Details   |   Bibliographic Reference

Full Details

Title: Delegation and the Ratchet Effect: Should Regulators Be Pro-Industry?

Author(s): David Currie, Paul L Levine and Neil Rickman

Publication Date: October 1999

Keyword(s): Delegation, Procurement and Ratchet Effect

Programme Area(s): Industrial Organization

Abstract: Delegation to independent bodies whose preference can be different from those of the government has been shown to have beneficial commitment benefits in areas as widely diverse as monetary policy and trade. This paper addresses the case for delegation in the context of a cost-reimbursement procurement problem. Our solution combines several features of the modern regulatory environment: government commitment to a particular regulator, the provision of independence to that regulator, and heterogeneity across regulators available. We find that delegation to an independent industry regulator, whose preferences are more pro-rent than those of the government, can raise welfare by mitigating the ratchet effect.

For full details and related downloads, please visit: https://cepr.org/active/publications/discussion_papers/dp.php?dpno=2274

Bibliographic Reference

Currie, D, Levine, P and Rickman, N. 1999. 'Delegation and the Ratchet Effect: Should Regulators Be Pro-Industry?'. London, Centre for Economic Policy Research. https://cepr.org/active/publications/discussion_papers/dp.php?dpno=2274