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Bureaucratic minimal squawk behaviour: theory and evidence from US regulatory policy

Leaver, C.; (2002) Bureaucratic minimal squawk behaviour: theory and evidence from US regulatory policy. (ELSE Working Papers 56). ESRC Centre for Economic Learning and Social Evolution: London, UK. Green open access

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Abstract

Regulators appointed on finite contracts have an incentive to signal their worth to the job market. This paper shows that, if contracts are sufficiently short, this can result in ‘minimal squawk’ behaviour. That is, regulated firms publicise the quality of unfavourable decisions, aware that regulators then set favourable policies more often to keep their professional reputation intact. Terms of office vary across US states, prompting an empirical test using firm-level data from the regulation of the US electric industry. Consistent with the theory, we find that shorter terms are associated with fewer rate of return reviews and higher residential electricity prices.

Type: Working / discussion paper
Title: Bureaucratic minimal squawk behaviour: theory and evidence from US regulatory policy
Open access status: An open access version is available from UCL Discovery
Publisher version: http://else.econ.ucl.ac.uk/newweb/papers.php#2002
Language: English
Keywords: JEL Classification: C23, C25, D73, J45. Bureaucratic behaviour, career concerns, regulatory capture, binary choice models with panel data
UCL classification: UCL > Provost and Vice Provost Offices > UCL SLASH > Faculty of S&HS > Dept of Economics
URI: https://discovery.ucl.ac.uk/id/eprint/14641
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