DP2381 Elected Versus Appointed Regulators: Theory And Evidence

Author(s): Timothy J. Besley, Stephen Coate
Publication Date: February 2000
Keyword(s): Elections, Electricity, Regulation
JEL(s): H11, L51, P16
Programme Areas: Public Economics
Link to this Page: cepr.org/active/publications/discussion_papers/dp.php?dpno=2381

This paper contrasts direct election with political appointment of regulators. When regulators are appointed, regulatory policy becomes bundled with other policy issues for which the appointing politicians are responsible. Since regulatory issues are not salient for most voters, regulatory policy outcomes reflect the preferences of party élites and special interests. Direct election of regulators strengthens the power of voters by ensuring the saliency of regulatory issues. Using panel data on regulatory outcomes from US states, we find evidence in favour of the idea that elected states are more pro-consumer in their regulatory policies.