Working Paper: CEPR ID: DP6861
Authors: Pedro P. Barros; Steffen Hoernig; Tore Nilssen
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: competition authority; regulatory bias; sectoral regulators
JEL Codes: H11; L40; L51
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| sectoral regulators are collaborative (L59) | competition authority allocates more resources to the industry with the more consumer-biased regulator (K23) |
| sectoral regulators are less consumer-biased (L59) | competition authority allocates more resources to the industry with the less consumer-biased regulator (L49) |
| sectoral regulator reacts less to competition authority's efforts (L59) | competition authority allocates additional resources to that industry (L49) |
| biases of sectoral regulators (L59) | competition authority's resource allocation (L40) |
| institutional arrangement (competitive vs collaborative) (L14) | interaction of biases and resource allocation (D91) |