American Economic Review
ISSN 0002-8282 (Print) | ISSN 1944-7981 (Online)
Bureaucratic Minimal Squawk Behavior: Theory and Evidence from Regulatory Agencies
American Economic Review
(pp. 572–607)
Abstract
This paper develops a model in which a desire to avoid criticism prompts otherwise public-spirited bureaucrats to behave inefficiently. Decisions are taken to keep interest groups quiet and to keep mistakes out of the public eye. The policy implications of this "minimal squawk" behavior are at odds with the view that agencies should be structured to minimize the threat of "capture." An empirical test using data from US State Public Utility Commissions rejects the capture hypothesis and is consistent with the squawk hypothesis: longer PUC terms of office are associated with a higher incidence of rate reviews and lower household electricity bills. (JEL D73, L51, L97, L98)Citation
Leaver, Clare. 2009. "Bureaucratic Minimal Squawk Behavior: Theory and Evidence from Regulatory Agencies." American Economic Review 99 (3): 572–607. DOI: 10.1257/aer.99.3.572Additional Materials
JEL Classification
- D73 Bureaucracy; Administrative Processes in Public Organizations; Corruption
- L51 Economics of Regulation
- L97 Utilities: General
- L98 Industry Studies: Utilities and Transportation: Government Policy