Abstract
Many decisions by regulators have been analyzed over the last two decades in an effort to test regulatory behavioral theories. As a result, the interest group theory of behavior has gained a considerable following and the public interest theory has been largely dismissed. However, many of these tests are inadequate; with the regulatory decisions analyzed, both the interest group and public interest theories lead to the same predictions. To properly distinguish between these theories, a set of necessary conditions that a regulatory decision must satisfy is developed. Based on these conditions and the extant empirical literature, public interest concerns of regulators cannot be dismissed, and a more general theory of regulatory behavior is suggested.
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Nowell, C., Tschirhart, J. Testing theories of regulatory behavior. Rev Ind Organ 8, 653–668 (1993). https://doi.org/10.1007/BF01024290
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DOI: https://doi.org/10.1007/BF01024290