Working Paper: CEPR ID: DP2381
Authors: Timothy Besley; Stephen Coate
Abstract: 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.
Keywords: regulation; elections; electricity
JEL Codes: L51; H11; P16
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Method of regulator selection (appointed) (G18) | Consumer prices for electricity (L97) |
| Method of regulator selection (elected) (C52) | Consumer prices for electricity (L97) |
| Appointed regulators (G18) | Increase in prices in response to rising fuel costs (L90) |
| Method of regulator selection (elected) (C52) | Frequency of power interruptions (L94) |