Scandinavian Working Papers in Economics

Memorandum,
Oslo University, Department of Economics

No 12/2008: Keeping Both Eyes Wide Open: The Life of a Competitive Authority among Sectoral Regulators

Pedro P. Barros, Steffen Hoernig and Tore Nilssen ()
Additional contact information
Pedro P. Barros: Universidade Nova de Lisboa; CEPR
Steffen Hoernig: Universidade Nova de Lisboa; CEPR
Tore Nilssen: Dept. of Economics, University of Oslo, Postal: Department of Economics, University of Oslo, P.O Box 1095 Blindern, N-0317 Oslo, Norway

Abstract: Competition authorities must pay attention to many industries simultaneously. Sectoral regulators concentrate on their own industry. Often both types of authority may intervene in specific industries and there is an overlap of jurisdictions. We show how a competition authority’s resource allocation is affected by its relationships with sectoral regulators and their biases. If agencies collaborate (compete), the competition authority spends more effort on the industry with the more (less) consumer-biased sectoral regulator. The competition authority spends budget increases on the industry whose regulator reacts less to more effort. The socially optimal budget corrects for distortions due to regulatory bias, but only downwards.

Keywords: Competitive authority; sectoral regulators; regulatory bias

JEL-codes: H11; L40; L51

33 pages, June 2, 2008

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Published as
Pedro P. Barros, Steffen Hoernig and Tore Nilssen, (2015), 'Transversal Agency and Crowding Out', Journal of Institutional and Theoretical Economics, vol 171, pages 589-608

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